The market is down 38 or 1% — would have been a lot worse if not for the big gains from metals in London overnight — Nickel up a big 11%. Property Trusts continue to struggle on capital concerns, financials also going backwards but resources outperforming led by BHP, RIO and FMG. 109 stocks in the All Ords have hit a fresh yearly low.
The Dow closed down 203 overnight. Up 221 at best. Down 231 at worst. Fell 200 odd points in the last 20 minutes. Dow Futures suggested a 100 point rise before the market open in anticipation of a 50-75bp interest rate cut from the FOMC this week. Financials overall underperformed — down 4.1% – multi-line insurers fell 17.7% on poor 3Q results from companies – AIG down 20.5%. There was news that Goldmans and Citigroup considered a merger last month – both down 8.5% and 3.4%. Regional banks outperformed — up 1.6% on the news they would receive US$31bn in capital injections from Treasury in the roll-out of the second half of their US$250bn package to shore-up lenders. A$ down against the US dollar.
- Both BHP and RIO down in ADR form overnight, 4.96% and 5.77% respectively.
- Metals all up – Nickel up 11.1%, Copper up 6.45% and Aluminium up 3.39%. Zinc up 1.5%.
- Oil price down $1.32 to $62.02 on continued concerns that demand will be affected by the credit crisis.
- Gold up $12.60 to $742.90.
- US Bonds down with the 10 year yield up to 3.68%.
Queensland Gas (QGC) has revealed the terms of BG’s takeover offer — BG is offering $5.75 cash for every QGC share valuing the company at $5.6bn, an 80% premium to QGC’s last traded price of 320c. The offer is final with the chairman and directors unanimously recommending the bid labeling it is “full” and “fair”. The bid will be financed from cash reserves and has been given the green light by the Foreign Investment Review Board. BG will retain the QGC brand. AGL Energy (AGK) announced it will sell its QGC stake to BG.
Treasurer Wayne Swan declared late yesterday a positive ruling on access for second tier miners to BHP Billiton’s and Rio Tinto’s Pilbara rail lines — Fortescue Metals (FMG) is a beneficiary — BHP and RIO argue it will put at risk billions of dollars in future investment. They have 21 days to lodge an appeal. Patersons Securities analyst believes it is more of a negative for RIO, as its two main iron ore production railway lines are involved, and believes other juniors such as Atlas Iron, Brockman Resources, Iron Ore Holdings and United Minerals, are also likely to benefit.
Other news today…
- BT Investment Management (BTT) has announced a cash net profit of $40m, up 10.5% — ahead of both guidance ($38.8m — $41.1m) and analysts’ expectations (consensus $36.6m, GSJB Were $37.9m). Revenue came in at $139.6m with FUM averaging $38.5bn over the year and closing at $35.3bn. Westpac Bank spun off the fund manager in December last year for $247m and has retained a 60% majority stake.
- Austar United Communications (AUN) said EBITDA increased by 14% to $53m in the 3Q and that it remains on track to achieve 20% FY EBITDA growth. It added 18,585 new subscribers, taking the total to 713,658.
- Becton Property Group (BEC) has come out of a trading halt and is up 60% after announcing that a formal due diligence has commenced with several interested parties providing proposals, which are confidential.
- Goodman Group (GMG) is in a trading halt — it has announced plans to raise $755m in new underwritten equity and sell assets to improve the look of its balance sheet. GMG cut its earnings guidance and expects to raise $230m from offering institutional investors underwritten securities at 90c and $525m from a retail entitlement offer at 90c. It expects to sell $500m worth of assets, having already completed $160m worth. Macquarie Group (MQG) also announced it would sell its Hong Kong interests in Goodman Asia.
- Lihir Gold (LGL) announced gold production increased by 41% in the 3Q to 250,000 ounces and reiterated it was on track to meet a FY production forecast of around 850,000 ounces in 2008.
- Harvey Norman (HVN) said like-for-like sales for the 28 days to October 26 fell 3.6% from the same time last year — a bit better than the 5.8% fall in 28 days ending October 19.
- BHP Billiton (BHP) says long term outlook for stainless steel (made from nickel) remains robust thanks to the industrialization of China.
- Envestra (ENV) held its AGM today and announced it expects a FY net profit of at least $25m which includes a $6m property sale. It will also cut its interim distribution to 4.5c and defer plans to raise $100m due to the volatile equity markets.
- NIB Holdings (NHF) rejected a $620m takeover and say they cannot reveal the bidder because of confidentiality agreements.
- Futuris Corp (FCL) expects to announce an underlying profit for the FY at the lower end of market expectations.
- Billabong International (BBG) has held its AGM and has upgraded FY09 EPS growth 12-15% and is yet to see the benefit from a falling Aussie dollar.
- Crown (CWN) has also held its AGM — expects a strong performance from its Australian Casinos.
Broker Stuff today…
- St. George (SGB) is expected to impress with its FY result tomorrow. Citi is anticipating a good showing and have upped their target price to 3013c from 2948c.
- Wesfarmers (WES) has had its target price cut by Citi to 3080c from 3190c — around $10 above the current share price — after reducing their coal price expectations. They maintain their Buy saying the recent sell-off has been well overdone.
- GSJB Were are removing Mount Gibson Iron (MGX), Platinum Australia (PLA), PanAust (PNA), Sedgman (SDM) and Imdex (IDM) from their model portfolio, and have added Macquarie Leisure (MLE), Australian Infrastructure Fund (AIX), Patties Goods (PFL), Tassal Group (TGR) and Mitchell Communications Group (MCU).
The Dow Futures suggest a 60 point rise on Wall Street tonight.
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