Our market is down 66 but holding up well considering the Dow Jones falling 332 overnight and having its worst inauguration day fall in history. Most of the damage was already done in yesterday’s ASX 113 point fall. Financials underperforming again with all of the big 4 banks down 3-4%. Property Trusts down 3.0%, Westfield down another 4.1% today to 1173c and resources down 1.9%. Obama’s inauguration is all over the media, blocking out almost everything else. Obama’s speech has continued with the message that it will get worse before it gets better with a somewhat disappointing plea for patience.

Overnight was another shocker – Dow down 4%. The US equity market is now down 16% since election day and close to a 14-year low. The S&P 500 fell 5.28%. Financials fell 17%. The S&P 500 is down 11% so far this year (that followed a 24% rally since November). It is the worst opening to a calendar year since 1928. There are reports that Obama’s team is planning its second round of stabilization packages to assist the banking sector.

In the news today…

  • BHP Billiton (BHP) released their 2Q Production Numbers. They will close Ravensthorpe Nickel and Yabulu and will take a US$1.2bn charge in their interim results and another US$400m in their 2H results… basically ringing the bell on the nickel sector.
  • Rio Tinto (RIO) announced it was cutting costs this morning — production cuts and job losses “in response to global economic conditions”.
  • David Jones (DJS) revised down their 2Q like-for-like sales guidance to a 9.5% decline on-year (from a previously guided 7.5% decline) due to a deteriorating economic outlook and also scaled back their profit guidance considerably.
  • Wesfarmers (WES) said 2Q coal production fell 9.9% to 845,000 from the previous quarter.
  • Cockatoo Coal (COK) is proposing to issue 19.76m shares for $10m.
  • Iluka Resources (ILU) issued in-line 2Q production and sales report — production outlook remains relatively unchanged. 2008 production impacted by gas outage in WA in June and July. Zircon and rutile production down as expected. Sales volumes of high value products in-line. Total mineral sands sales revenue for the year increased by 16.7% and by 9% after accounting for hedging.
  • Macquarie Countrywide Trust (MCW) dissolves two Regency JV’s to pay down debt.
  • CSR Limited (CSR) will close its automotive glass units at Geelong and Laverton with a loss of 115 workers due to declining car manufacturing. Only a small part of the business with negligible earnings impact. Says it won’t affect other glass units. Will cost $13m in the 2H as a one-off item.
  • PanAust Limited (PNA) has trading halt lifted – share placement was over-subscribed. Down 13%.
  • UXC Limited (UXC) announces wins of $30m in contracts in the environmental sector and reiterates earnings guidance.

Broker Stuff today…

  • UBS Warburg say the now prefer Rio Tinto over BHP Billiton after lifting their recommendation on RIO to Buy from Neutral and downgrading BHP to Neutral. Although they concede BHP is better positioned at this point in time, they view the discount at which RIO trades to be excessive.
  • ABN AMRO has upped Telstra to Buy from Hold with a 477c target price saying the recent sell off has been overdone and the negativity overplayed.

Other Stuff…

  • 1% Rate Cut — The new expectation, in the face of the latest leg down in global financial stocks, is that the RBA will cut interest rates by a full 1% on February 3rd.
  • The Governor of the Bank of England Mervyn King has made a speech and he basically says that the UK is going to contract sharply this year and it will take a long time to recover. Not good for the markets.
  • The Dow Futures suggest a 9 point rise on Wall Street tonight.

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