The market is up 27 points and struggling to reach the 43 point rise predicted by the SFE Futures despite the Banks putting on a great performance. Financials up 2%. CBA up 6.1%. Property Trusts are underperforming after Westfield — the sectors biggest company — announced late last night it would writedown $3bn worth of assets. Building stocks are also struggling on the back of a profit warning from Boral — down 15%. Resources down 0.4% – BHP up 0.4% and RIO down 4.2% saying it won’t rule out an equity raising to pay down debt.
Dow up 58.7. Up 109 at best. Down 33 at worst. Financials up a strong 3.7% with the relief of most the 4Q results out of the way. Steel stocks up on solid 4Q results from United States Steel Corp. American Express posted profits under difficult conditions. Semiconductors up as Texas Instruments posted modest earnings. Airliners smashed on Delta Airlines posting a 4Q loss of $1.4bn. Telecom stocks down 3% with disappointing 4Q results from Verizon Communications. Consumer confidence at its lowest levels since the initiation of the index in 1967. US home prices down 18.2% from Nov 2007.
The main story today is Westfield’s $3bn writedown on their global property portfolio — also said they would cut their dividend. The response has been muted — not a big surprise and the 6-9% cut in dividend and NTA was to be expected and is likely to continue over time. They yield is still 8.0-8.3%. The general feel is that companies are currently being realistic and cutting distribution forecasts and are more likely to rally than fall on any increased certainty and clarification that is not disastrous.
- Woolworths (WOW) posts 1H sales up 8.8% on-year to $26.1bn — slightly below expectations. 1H liquor and supermarket sales up 9% and 8.7% on-year. Expects FY sales to grow in the upper single digits range — said it’s well positioned to meet future challenges.
- Boral Ltd (BLD) slashed earnings guidance by 40% due to the worsening housing market in the US, Australia and Asia. Profit warning — dropped net profit expectation to $120m for the FY to June 30th 2009, down from a previous guidance of $200m. Will maintain dividend payout ratio at this stage but said the interim dividend will be substantially lower.
- Bank of Queensland (BOQ) raised $108m at $7.64/share via an institutional placement to fund organic growth. Impairment charges remain in-line with those of FY08.
- Lihir Gold (LGL) posted record FY gold production at 882,000 ounces beating guidance of 850,000 ounces. Strong performance. Cash costs at the low end of the range.
- Santos (STO) raised year-end 2P reserves 134MBOE driven by an increase in the coal seam gas reserves.
- Worley Parsons (WOR) secures a Saudi Arabian clean fuels project worth up to US$400m.
- Avoca Resources (AVO) posted 2Q gold production from trident in-line with expectations at 27,856 oz.
- Aquarius Platinum (AQP) increased group production over the 2Q09 and reduced cash costs but falling PGM prices led to an after tax loss of $75-85m including a $20m loss with the close down of their Everest mine.
- Newmont Mining (NEM) posted positive operating results with equity gold sales of 5.2 million equity ounces at costs applicable to sales of $440 per ounce. Equity copper sales were 130 million pounds at costs of $1.38 per ounce.
- CBH Resources (CBH) said its Endeavor Mine performing ahead of expectations in their quarterlies.
- Deep Yellow (DYL) said Inca mine is returning some high grade intersections. Said there’s $50m in cash and they have an exploration budget of $12m for 2009.
- GSJB Were cut Westfield’s (WDC) target price to 1167c from 1283c and cut their distributions expectations by 13% on the back of their $3bn writedown. Merrills say BUY WDC with a 1475c target.
- Citi say BUY Wesfarmers (WES) — have 2480c target price — say WES’ recent capital raising has reduced concerns about debt refinancing.
- Australian 4Q CPI fell 0.3% in the 4Q vs 3Q on falling food and fuel prices — more than offset the rising import prices due to the falling A$. Helps offset the higher-than-expected PPI figures yesterday. Paves the way for an aggressive RBA rates cut next Tuesday.
- FOMC statement tonight. They can’t really cut interest rates any more.
- The Dow Futures suggest an 87 point gain on Wall Street tonight.
MARCUS PADLEY is the Author of the MARCUS TODAY Daily Stockmarket Newsletter.
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