The market is down 20 after being down 68 on the open in-line with the 69 point fall predicted by the SFE Futures this morning. Trading volatile. Not a lot of news this morning. Resources and industrials underperforming following the fall in commodities overnight. Metal stocks mostly down – Fortescue down 7.9% as their highly regarded head of operations resigns. Gold stocks down – Newcrest down 5.2% and Lihir Gold down 1.2%.

Financials and property outperforming – up 0.6% and 3.2% at midday. Banks trading erratically this morning after yesterday’s falls – CBA down 0.2% and Westpac up 0.2%. NAB down 0.4% and ANZ unchanged. Big industrials mixed – Fosters up 1.4%.

The Dow was down 176. Down all session – down 309 (3.7%) at worst – rebounded off low in the last half-hour. Main Points: The US government through Fannie Mae and Freddie Mac are introducing more measures to avoid housing foreclosures. Earnings downgrades not helping. Fears of a consumer spending slump grows. Starbucks reported lower sales across its chain. Toll Brothers – builder – announced a sharp drop in revenue. Car manufacturers face sharp production cuts despite a possible government bailout. GM down 13% under severe stress – needs a bailout or some form of liquidity. The bond market was closed for Veteran’s Day. US Dollar up 1.4% against the basket of currencies. A$ down 1.82% against the US dollar. Commodities down 5.8% overall. Oil down 5.8%. Gold down $13.70 and metals all considerably down bar zinc (up 1.04%). Financials down. Defensive utilities outperform – up 0.2%.

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  • After falling 63% yesterday, Asciano (AIO) has told shareholders its assets continue to perform and that a major equity issue is not on the cards despite Citi’s research yesterday. They promised “further updates” in coming weeks. AIO up 15% after being down 12% early on.
  • Some bearish comments on Rio Tinto (RIO) from both UBS Warburg and Merrill Lynch – UBS say weaker commodity prices forecasts might make it harder for them to meet their loan repayments and now expects that RIO will generate free cashflow of US$3.4bn in 2H08 and US$2.4bn in 1H09. Merrill’s cut its earnings expectations for RIO in 2008 by 4% to US$12.8bn on the back of its 10% iron ore production cutback.

Making the news…

  • Westfield Group (WDC) has provided a 3Q Review – it has reaffirmed earnings guidance but said 3Q retail sales growth slowed in key markets. It also said that it would be happy to have a look at businesses that have put themselves up for sale. WDC has outperformed the index – down 29% compared to the 38% fall in the overall market.
  • Sonic Healthcare (SHL) will raise around $350m to pursue acquisitions and strengthen the balance sheet – it is expected to be priced in at a range of 1140c to 1220c. SHL is currently in a trading halt – last traded at 1300c.
  • Incitec Pivot (IPL) is also in a trading halt ahead of a capital raising believed to be around $1bn at 250c a share according to the AFR.
  • SingTel Group’s (SGT) 2Q09/1H09 results reported a 5% gain in 2Q operating revenue on-year, boosted by iPhone sales.
  • Metcash (MTS) announced it will cancel an interest rate collar linked to its takeover of Foodland to make the most of recent falls in interest rates. Transfield Services (TSE) will remain in a trading halt for a further 2 days as it continues to work through its proposed capital restructure initiatives.
  • WorleyParsons (WOR) has won a construction service for Devon Energy’s Jackfish 2 Project.
  • Talk of Clive Peters getting bid for after the AFR revealed that its CEO had been approached by potential bidders. GSJB Were says JB Hi-Fi would be a good strategic fit for its Clive Anthony’s division. Some even say Harvey Norman might have a crack.
  • GRD Ltd (GRD) has won a second Olympic Dam contract.

Broker Stuff today…

  • Credit Suisse has upped Aristocrat (ALL) to Outperform from Neutral due to recent share price depreciation. They say, “In the past 11 days, ALL’s share price has fallen 5.3% while the S&P/ASX 200 has fallen 1.4%”. They have a 550c target price.
  • Fairfax Media (FXJ) has been cut by Merrill Lynch to Neutral from Buy and its target price to 230c by 24% saying the media sector is facing a deeper cyclical downturn than previously thought.
  • Credit Suisse has restarted coverage on ANZ Bank (ANZ) with an Underperform recommendation and 1800c target price. Despite the recommendation it is their top pick in the bank sector.

Other stuff…

  • There is plenty of fear around that General Motors will go bust after hitting the lowest share price since 1946 and reporting a $4.2bn 3rd Q loss last Friday.
  • The Dow Future suggest a 47 point rise on Wall Street tonight.

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