Out market is up 81 points after being up 100 points around 11:30am. Outperforming the 24 point rise predicted by the SFE Futures this morning.

The Dow was up 248. Up all session — up 265 at best. Market overlooked negative employment data and poor 3Q results – market had already factored in the bad news. Unemployment rocketed to 6.5% with a larger-than-expected fall in payrolls – was up a hefty 0.4% in October from September. President Elect Barak Obama said the US requires a fiscal stimulus plan and a rescue package for the middle class. Ford and General Motors ate through their cash reserves in the 3Q. Bonds down. Gold and metals up moderately. A$ up 1.38% against the US dollar — and up 2.39% this morning to 69.17c.

It has been a busy start to the week…

The Chinese government kicked off proceedings yesterday when it announced a $586bn stimulus package — equivalent to almost a fifth of its GDP last year – to boost domestic infrastructure spending and stimulate their economy which has dropped to an annualised GDP growth rate of 9%. All the cash will be used up by the end of 2010. Resources outperforming on the back of the news.

The big news today is the National Australia Bank’s decision to raise around $2bn in capital to strengthen its balance sheet and take advantage of organic growth opportunities. It also said it will not continue with its previously announced DRP underwrite for the 2H08 final dividend. There are suggestions that they will have no drama’s raising the money. NAB currently in a trading halt, last traded at 2215c. The banks are underperforming on the back of the announcement. CBA down 2.8%, WBC down 2.9% and ANZ down 1.6%.

Other news today…

  • Orica Ltd (ORI) posted a better-than-expected 15% jump in FY net profit to $572.3m from $497.8m a year ago and expects profit to grow again in 2009. Sales increased 18% by $6.54bn from $5.53bn. The stock has struggled in the past year along with the rest of the market, down 36.9%.
  • Perpetual Limited (PPT) has reopened its applications to mortgage funds.
  • Oz Minerals (OZL) said it is reviewing capital and operational expenditure so as to ensure all “essential” projects are funded.
  • In light of the NAB’s announcement to raise capital — the ANZ Bank (ANZ) says it has no plans to raise capital “at this stage” apart from underwriting its dividend reinvestment plans.
  • PanAust (PNA) will raise output at its copper-gold Phu Kham mine in Laos to 65,000 tons — 10% higher than their previous forecast. Said input costs are down due to falling oil and steel prices.
  • Transfield Services (TSE) is in a trading halt due to capital management initiatives being incomplete. UBS Warburg cut their recommendation to Neutral and their target price to 450c.
  • Foster’s Group’s (FGL) head of Australia and Asia Pacific division Jamie Odell has resigned after nine years.
  • Commonwealth Property Office Fund (CPA) expects property valuations to remain under pressure. It announced a slight fall in the value of its 8 properties.
  • Redflex (RDF) was awarded two contracts by the villages of Brookfield and Justice, Illinois.
  • Spark Infrastructure Group (SKI) announced it has doubled a revolving debt facility to $100m and locked in interest rates on a further $200m of debt until June 2011.

Iron ore stocks in focus…

  • Rio Tinto (RIO) has announced it will cut iron ore production at its operations in the Pilbara by 10% due to reduced demand from its customers.
  • Fortescue Metals (FMG) has brought forward a planned shutdown of its port and iron ore mine processing facilities for upgrading work which will impact 2008 production. Patersons Securities maintain their Buy recommendation and 853c target price.
  • Atlas Iron (AGO) has delivered its first iron ore from its Pardoo Iron ore project.

Other stuff…

  • The RBA has released its statement on Monetary Policy — has cut its forecasts for medium-term inflation, economic growth outlook and suggest it will continue to cut rates.
  • October SEEK Employment Index showed the Australian jobs market is softening but not as fast as expected — SEEK said the decline was in-line with the average decline of 4.5% per month since December 2007.
  • The G20 nations Sunday agreed to take measures to stimulate growth and fight the threat of a global recession.
  • The Dow Futures are suggesting a positive night on Wall Street — up 162 at midday.

MARCUS PADLEY is the Author of the MARCUS TODAY Daily Stockmarket Newsletter.

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