The market is down 77 — more than double the 30 point fall the SFE Futures suggested this morning. All sectors down. Financials down 1.6%. Banks all down — WBC down 1.7% as it increased its government-guaranteed US dollar denominated bond issues by $400m bringing the total size to $1.9bn. The ANZ (down 1.8%) and Macquarie Group (down 5.6%) have already increased their US offering by $100m and $400m respectively. Resources down 2.5% — Fortescue down 7.6% on legal disputes over cancelled shipping contracts. Macarthur Coal down 23% early after slashing profit and sales guidance as customers postpone export shipments. Big industrials down 0.9% as Macquarie Infrastructure Group falls 8.5% on the open on slashing valuations on it toll road portfolio. Qantas down 2.2%. Lend Lease down 5.4% on appointing the finance director McCann as the new CEO. Coca-Cola down another 5.0%.

The Dow was down 65. Up 47 at best. Down 160 at worst. Rallied hard in the last half hour. All 10 sectors down. Financials down 4% on the market on expectations of further losses being posted in upcoming quarterly results. Fed likely (66%) to cut rates by 75bps to 0.25% tonight. Consensus is for a 50bp cut. The fate of the US auto industry remains uncertain. The White House said a more comprehensive auto bailout is on the way. GM and Ford up 3.55% and 4.61%. Madoff’s $50bn fund fraud likely to end with write-offs for many firms and individuals. Home builder sentiment remains at all-time lows. November’s industrial production and manufacturing output down. US dollar down with the impending rate cut and the worsening economy.

Telecommunications companies down 6.1% as Telstra falls another 6.6% after negative broker comments regarding the Government’s exclusion of Telstra from the NBN process.

Making the news today…

  • Fortescue Metals (FMG) has provided a Shipping Contracts update — says it will use legal mechanisms for settling shipping contract disputes.
  • Harvey Norman (HVN) has announced like-for-like sales for the 28 days to Dec 14 — up 4.5% on last year.
  • Macquarie Infrastructure Group (MIG) cut the value of its asset portfolio by 24% due to the negative impact of the global economic downturn. June portfolio valuation was $8.6bn, Dec 31 Portfolio value expected to be $6.5bn.
  • Lend Lease (LLC) has appointed Steve McCann — current finance director — as a replacement for its outgoing CEO Greg Clarke who is retiring.
  • Cape Lambert Iron (CFE) has provided a market update.
  • Nexus Energy (NXS) said operations at an exploration well in WA have been suspended due to a potential oncoming tropical cyclone.

Broker Stuff today…

  • Lots of broker stuff on Telstra this morning after the government excluded them from the National Broadband Network “requests for proposals” process for a reason Telstra described as “Trivial”. Macquarie Equities cut their recommendation to Neutral, JP Morgan maintain their Underweight recommendation and GSJB Were cut their recommendation to Hold from Buy. ABN AMRO also cut their recommendation to Hold from Buy and UBS Warburg remain positive on the stock, they maintain their Buy recommendation.
  • Morgan Stanley maintain their Underperform recommendation on Fortescue Metals (FMG) but cut its target price to 106c from 184c and forecasts a loss of $542m in the first half of next year for the company.
  • JP Morgan has upgraded Commonwealth Bank to Overweight from Neutral and upped its target price to 2955c from 2739c. It also raised the National Australia Bank to Neutral from Underweight despite cutting its target price to 1953c from 2237c.

Other stuff…

  • The RBA has released the minutes from its December 2 meeting reiterating that it’s in no rush to ease monetary policy further, although more rate cuts might be on their way next year.
  • GSJB Were has a positive view of Wall Street for the next four weeks. With the US economy already in a recession for a year, they are no longer seeing the “market dropping like a sack of potatoes when bad data hits”. They say historically the 15 trading days from mid-December to the fifth trading day in January has seen Wall Street rise in 23 years of 27, for average gain of 4.4%.
  • FOMC Meeting tonight — Federal Reserve expected to cut rates by 50bps, some say they might even cut them 75bps.
  • The Dow Futures indicate a flat session on Wall Street.

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