The market is down 113 – not good given the 23% fall over the last 11 days in one of the worst legs down this year. Outperforming the 163 point fall predicted by the SFE Futures this morning. Resources underperforming again after yesterday’s massive sell-off. BHP and RIO down 3.8% and 4.5%.
The Dow was down another 444 points (5.6%). Up 190 at best. Down 483 at worst. S&P 500 down to its lowest level in 11-years — down 52% off highs — worst yearly decline in 80 years. Fears of deeper and longer recession. Lack of leadership felt from Treasury. Auto makers bailout scuttled by congressman until a further meeting in Dec. Jobless claims higher-than-expected — the highest levels since 1982. 11th month in-a-row of declines in non-farm payrolls.
Businesses looking to cut expenses to preserve company performance with the economy rapidly turning down. The index of leading indicators down for the 3rd time in 4 months. Manufacturing in the Philadelphia region contracted at the fastest pace in 18 years. Speculation that General Electric is looking for an equity injection from global sovereign wealth funds. Citigroup gets a capital injection from Saudi Prince. A$ down with falling equities and a demand slump for resources — fell 4.2% against the US dollar last night.
Material stocks down 3.87% – both BHP and RIO down 13% and 12.9% in ADR form respectively. Oil price down $4.78 to a 3-year low to $49.86. Gold up $12.70 to $748.70. Financials down 10.5% – down 68% for the year. Citigroup down 26%.
All Ords down 50.9% off high. In 1773/4 it fell 59.4%. The All Ords has dropped from being worth $1.689 trillion to $821bn…a loss of $868m. Total market losses (all stocks not index stocks) of $905bn.
Making the news today…
- Telstra (TLS) held its AGM this morning — says it is on track to meet market guidance (expects a 6-8% increase in EBIT and 3-4% rise in revenue) and that the board hasn’t decided whether it will lodge a bid for the federal government’s proposed $4.7bn national broadband network. They want clarity from the government that its infrastructure and retail units won’t be separated.
- Woodside Petroleum (WPL) getting canned after the oil price hit a 3 year low overnight. WPL’s share price is strongly correlation to the oil price.
- Fortescue Metals (FMG) doing well after announcing it has signed a sales deal for an extra 3.5m tons of iron ore a year with a Chinese steel mill.
- Sims Group (SGM) has held its AGM — expects a net profit of between $120m-$140m for the 1H, slightly higher on the previous year.
- Gunns (GNS) announced it will not seek to renew its sovereign risk agreement for wood supply to its Bell Bay pulp mill project.
- Australian Infrastructure Fund (AIX) — QLD Airports announces a 6.8% passenger increase in October.
- AXA Asia Pacific (AXA) has released its Strategy Briefing announcing it had $724m surplus capital available at the end of October and has accessed $280n if debt facilities. They highlight that they are not immune to the current economic environment.
- Cudeco (CDU) is in a trading halt.
- Goodman Group (GMG), Macquarie Group (MQG) and Japan Representatives have established two wholesale, unlisted logistics property funds that have attracted $106m thus far.
- Paladin Energy (PDN) has increased uranium resources and reserves at its Kayelekera project in Malawi
- Nexus Energy (NXS) has scrapped its plans to take a production-and-storage vessel from Viking Shipping.
- Albidon (ALB) in a trading halt – will announce details of a capital raising.
- Babcock & Brown Wind Partners (BBW) has announced corporate governance changes.
- Base metal stocks all down on lower metal prices. Murchison Metals (MMX) down 6.2%. Indophil Resources (IRN) down 16.7%.
- All the big industrials are down bar Wesfarmers (WES) which is up 1.9% after yesterday’s 9.2% fall.
- GSJB Were’s have a BUY recommendation on Fortescue Metals. Target price 307c…now 129c….137% above reality.
- UBS Warburg maintain their NEUTRAL recommendation on Macmahon Holdings (MAH) and 90c target price, nearly three times the current share price.
- GSJB Were maintain their BUY recommendation on Sonic Healthcare (SHL) after its AGM saying, “SHL is now trading broadly in-line with its domestic services peer group versus a historical premium of about 15%-20%.
- Since June this year, Australian companies have raised $17.4bn worth of capital, up 6% from the same time last year. Capital raisings in the rest of the Asia-Pacific region has fallen 86%.
- According to The Australian, the big 4 want the Australian government to overhaul its guarantee on bank deposits.
- The Dow Futures suggest an 87 point rise on Wall Street tonight.
MARCUS PADLEY is the Author of the MARCUS TODAY Daily Stockmarket Newsletter.
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