Our market is up 81 well ahead of the 16 point gain predicted by the SFE Futures this morning. Resources pumping — up 5.0% led by both BHP Billiton and Rio Tinto after a strong night on the London Metals Exchange. Oil closed up 3% — Woodside up 3.6%. The FOMC decides on interest rates tonight — with US rates basically at zero, all we can expect is a statement on the economy.
Dow closed up 38 overnight. Up for most of the session but was dragged down by sustained fears around the banking sector. Financials down 2.1%. Caterpillar down 10% — announced FY09 profit would be down dramatically on-year and will make hefty job cuts. Biggest pharmaceutical takeover was announced – with Pfizer making a $68bn takeover bid for Wyeth. McDonalds posts strong results. December existing home sales unexpectedly up due to plummeting house prices. December’s economic activity up 0.3% due to government cash injections. Home Depot, Sprint Nextel Corp, Pfizer and General Motors all cutting jobs.
Good news for Wesfarmers — the institutional entitlement offer from WES raised the $2bn they needed with the institutional bookbuild element being placed at $15 against a rights price of 1350c with the company clearly seeing “strong demand”. Good for the market and Wesfarmers to see the support after such a poor share price run.
Tolhurst Group (TNL) has gone into a trading halt — talk is that it has been bid for by another broker having overextended themselves in the bull market — they have been forced into discussions by debt, excessive costs and a dwindling revenue base.
- Rio Tinto (RIO) announced the sale of the Alcan stake in Ningxia aluminium smelter and said its iron ore ports in WA are closed until Wednesday due to a cyclone.
- Oil Search (OSH) reported a 13% rise in operating revenue for 2008 at US$811.6m. 2008 oil and gas output was in-line with guidance at 8.58MMBOE.
- Centennial Coal (CEY) said 2Q production was up 11% on-quarter and up 25% on-year. Said thermal coal exports were strong.
- Babcock and Brown Capital (BCM) announced it expects a material reduction in investments and expects net assets below $937m in December.
- Macquarie Countrywide (MCW) will sell 30 US malls for US$427m to reduce debt and meet its refinancing obligations in the 2H of 2009.
- AGL Energy (AGK) declares the Sydney Gas (SGL) offer unconditional.
- Macquarie Infrastructure Group (MIG) posted 4Q traffic down 4.1% on-year and revenue down 2%.
- Lihir Gold (LGL) said production out of its PNG mine has been interrupted by a land dispute.
Broker Stuff today…
- GSJB Were keep a HOLD on Woolworths with 3145c target predicting sales growth of 6.8% in their food and liquor division.
- Lihir Gold’s target was cut to 250c from 320c by Credit Suisse due to cuts in their gold price forecasts.
In other news…
- Citigroup cuts 2009 commodity prices by an average of 35% — copper cut 38%, aluminium by 40%, and iron ore by 30% for 2009/10 contract year.
- JP Morgan analyst says Valad Property Group (VPG) may be in the breach of its interest coverage ratio due to impairments on its VCS and Crownstone investments — Valad is in talks with its lenders to restructure facilities and covenants.
- Results season starts this week with diversified industrial groups Alesco and GUD Holdings who report half yearly figures — they’ll be closely scrutinized for the impact of the global financial crisis and the slowing national economy.
- Australian 4Q PPI up a more-than-expected 1.3% from the 2Q against the forecast of just a 0.3% rise — mainly due to higher import prices on the back of the falling A$.
- The Dow Jones Futures are predicting a 44 point rise on Wall Street tonight.
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