The market is down 104 underperforming the 24 point fall predicted by the SFE Futures this morning. Resources and property taking it in the neck – down 4.2% and 3.5%. BHP and RIO down 3.9% and 2.1% as China announced their 4Q GDP figure yesterday at 6.8% – in-line but the slowest pace in 7 years and down from 9% in the 3Q. Japan and China have already cut steel production by 28% and 5% respectively. Oz Minerals received a bridging facility for $140m to tie them over until the 27 Feb when their $1bn in debt needs to be rolled over. Financials weak — all the banks down about 3-4%. CBA reported funds under administration and management down about 11% each due to net retail outflows of about $749m.
The Dow was down 105. Down all session — negative 271 at worst. Market buoyed somewhat by the new stimulus plan designed by two House committees for voting on the floor next week. Financials down 5.8%. Poor results from Tech bellwethers and negative outlooks brought the sector down — technology stocks down 2.3% – Microsoft posted negative 2Q earnings early — 11% drop in profit — will cut 5,000 jobs. Apple beat earnings estimates but issued downside guidance. Google beat 4Q estimates. December housing starts and permits down much more than expected. Oil down 23c to $42.33 and Gold up $8.70 to $858.80.
In the news today…
- Santos Limited (STO) reported FY production in-line at 54.5m BOE but down 8% with 4Q production up 3% on quarter. FY08 sales revenue was a record $2.8bn, up 11% on year. FY09 production guidance 53-56m BOE.
- Sims Metals (SGM) struggling after cutting its 1H net profit forecast by up to 36% due to further deterioration in global stainless and titanium markets.
- Murchison Metals (MMX) reported lower ore production at 50%-owned Crosslands Resources. Said 4Q shipping of exported lump was up 15% on the Sept quarter. Said it was well placed to weather the financial storm — but noted the iron ore market is a concern.
- Macquarie Airports (MAP) said 4Q and FY EBITDA at Sydney Airport was +0.6% and +6.9%. Sydney’s 4Q pretax earnings were little changed.
- Commonwealth Property Group (CPA) came out of their trading halt having raised $192m in an institutional placement to pay down debt and strengthen its balance sheet.
- Resolute Mining (RSG) issued their quarterly report on activities and announced it had raised $6m through the placement of shares not taken up in the recent rights issue prospectus.
- Valad Property Group (VPG) announced progress in cost management initiatives, extended the term of one of its European managed funds and updated on its capital management issues. Will reduce staff by 25% and will incur further writedowns.
Broker Stuff today…
- Merrill Lynch upped their recommendation on Wesfarmers (WES) to Neutral from Underperform after their decision to raise equity yesterday. They have a 1750c target price. Citi maintain their Buy recommendation but cut their target price to 2480c from 1910c.
- Macquarie Equities maintain their Outperform recommendation on Woodside Petroleum (WPL) and 5508c target price and described their revenue result as “sound”.
- JP Morgan expects the RBA to cut interest rates by 1% when it meets on February 3. Initial prediction was half a percent, but the recent “avalanche of gloomy news” has resulted expectations for a bigger cut.
- The Dow Futures suggest a 38 point fall on Wall Street tonight.
MARCUS PADLEY is the Author of the MARCUS TODAY Daily Stockmarket Newsletter.
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