The market is down 77 after being down 94 at worst following a solid rise of 1.17% in the US Friday – albeit on lower volumes. Underperforming the 15 point rise predicted by the SFE Futures this morning. Resources down 2.2% – BHP and RIO down 3.8% and 5.7%. Financials down 2.6% with the major banks all down. Industrials down 2.9%.

The Dow was up 102. Up 105 at best. Down 54 at worst. Shortened session for half-day holiday in the US. Stronger-than-expected performance for the biggest retail trading day of the year in the US. Retailers down and Energy stocks underperform. British Government buy major stake in Reserve Bank Scotland. GM looking at brand divestments to survive. A$ down 0.6% against the US$. Treasuries up with the 10-year yield at historic lows of 2.91% – shows the general aversion to the higher risk of other investments globally.

In the news today…

  • GPT Group (GPT) said it has set price guidance for its buy back of up $700m of existing March 2009 bonds at around 200bps over the bank bill swap rate.
  • Transfield Services (TSE) raised $240m from its deeply discounted $1.25 per share fully subscribed institutional offer with the retail component of the offer to open today. TSE will partly use the equity to pay down debt and strengthen its capital position.
  • Futuris Corp (FCL) has issued a profit warning saying they expect a underlying net profit of $60m.
  • Gunns (GNS) said that a wood supply agreement renegotiation provision with government agency Forestry Tasmania will be extended to late 2010.
  • Insurance Australia Group (IAG) will boost its interest in its Malaysian joint venture, AmAssurance, to 49% from 30%.
  • Macquarie Infrastructure Group (MIG) sells Westlink M7 interest for $805m with net proceeds at $402.5m – looking also to sell other road businesses.
  • Leighton Holdings (LEI) said its $1.21bn Trump Tower project in Dubai has been suspended due to the “easing market conditions.” Developer Nakheel to cover all cost – no material effect for the Al Habtoor Leighton Group.
  • Alesco Corp (ALS) has conducted a review of their Robinhood Business.
  • iSOFT (IBA) wins a $14m pharmacy contract with the WA Health Department.

The Babcock’s are in focus…

  • Babcock & Brown (BNB) says they expect to make an announcement on discussions with banks of Wednesday.
  • Babcock & Brown Communities (BBC) – Prime Trust won’t proceed with compulsory acquisitions. They hold 1.57% of BBC.
  • Babcock & Brown Infrastructure (BBI) has responded to a speeding ticket. They have no idea why the share price is flying.
  • Babcock & Brown Japan Trust (BJT) has provided an update on their debt arrangements and capital management update.

Broker Stuff today…

  • Deutsche Bank has a HOLD recommendation on Rio Tinto (RIO) with a 4500c target price and a BUY recommendation on BHP Billiton (BHP) with a 3470c target price. They say the key risks to their forecasts are changes to commodity prices and exchange rates beyond their expectations.
  • Credit Suisse cut OZ Minerals (OZL.AU) to Neutral from Outperform after their announcement on Friday saying, “With the stock technically in breach of its debt conditions, albeit through a technicality, we do not feel that we are able to maintain our recently upgraded Outperform rating”.

Other Stuff…

  • The Reserve Bank of Australia is expected to cut rates tomorrow by between 75bps and 100bps. Majority of economists are expecting a 75bps. RBA, RBNZ and European Central Bank all meet this week and are all likely to cut interest rates further.
  • According to The Australian, Babcock & Brown’s future lies in the hands of two European banks that aren’t prepared to commit $200m to help BNB survive.
  • The Dow Futures suggest a 88 point fall on Wall Street tonight.

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