Disappointing day for our market — down 128 — underperforming the 14-point fall the SFE Futures suggested. The big drop comes on the back of the UK’s financial sector collapse overnight. US Markets were closed in recognition of Martin Luther King holiday. Financials are struggling — down 3.9% overall, with the big four banks the worst performers — all down over 4.3%. Resources also underperforming led by BHP and RIO, both down over 5%.

Twenty-five of the 42 companies who have reported their 4Q results in the US have missed consensus — fears are growing that a recovery in the markets could be pushed back to 2010. Both BHP and RIO down 1.6% and 1.1% in the UK. Metals mostly up. European stock markets down with banks falling heavily on the news of a second British government bailout package in just three months and the thought that the Royal Bank of Scotland (RBS) may be fully nationalised. RBS fell 67% on announcing they will take the biggest full year loss ever of around ₤28bn.

  • Macquarie Airports (MAP) reported December passenger traffic at Sydney Airport down 0.8% from a year ago. Copenhagen and Brussels fell 9.8% and 9% respectively during the month.
  • Qantas Airways (QAN) reported passenger numbers for November were down 3.8% on a year ago.
  • AGL Energy (AGK) acquired permit interests in Innamincka Petroleum (INP) in the Copper Basin. The farm-in involves a cash payment of $15m and funding of $10m.
  • Origin Energy (ORG) said NZ’s Contact Energy (in which it has a 51.36% stake) has had its earnings impacted in the current FY due to extreme hydrological conditions and transmission constraints.
  • Fairfax Media (FXJ) has sold its Southern Star television production and distribution business to Endemol for $75m.
  • Minara Resources’ (MRE) release 4Q FY08 production report highlighting lower production due to lower throughput. Overall the oversupplied nickel market in 2009 is expected to keep nickel prices low and MRE at breakeven position.
  • Western Areas (WSA) released their December quarterly activities report — beat its production target at its key Flying Fox nickel mine. Also achieved a 47% reduction in cash costs at Flying Fox over the quarter.
  • Carbon Energy’s (CNX) Underground Coal Gasification (UGC) plant in southeastern QLD has produced commercially viable syngas.
  • Arrow Energy (AOE) announced a joint development with Ephindo to develop the CBM Block in Indonesia.
  • Albidon Limited (ALB) gave their business update for January, saying production from the Munali Nickel Project for the December 2008 quarter was below forecast.

Broker stuff today…

  • The Australian Banking sector was cut to Underweight by Credit Suisse saying they will continue to get more inexpensive considering the EPS downside risk. They believe EPS forecasts are too high.
  • Macquarie Equities have downgraded Telstra to Underperform and maintain their 380c target price, believing investors should start factoring in uncertainty over NBN outcomes that will weigh on the stock.
  • GSJB Were maintain their Sell recommendation and 2931c target price on Commonwealth Bank of Australia (CBA) saying the stock remains expensive and is trading, according to their figures, at a 14.3% premium to peers on FY09 PE basis.

Other stuff…

  • The Dow Futures are currently down 76 on the back of the UK financial sector collapse.
  • Obama’s inauguration is tonight — you can see it at 3am on TV tomorrow morning.
  • Warren Buffett has described the financial crisis as an “economic Pearl Harbour”.

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

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