The market is up 26 underperforming the 63 point rise predicted by the SFE Futures this morning. Resources leading the way — up 1.8% – BHP up 4.6% and RIO down 1.3%. Lots of RIO research this morning discussing the options for a capital raising after the announcement yesterday that a rights issue was a possibility — The Times in the UK reported RIO in talks with Chinalco about a possible multibillion injection and asset sales. Financials up 1.0% — banks all up 1% or 2% — NAB outperforming — up 3.0%. Industrials lagging – down 1.1%. Wesfarmers down 3% as their retail entitlement offer proceeds.

Dow up 200. Up all session — 231 at best. Financials up 13% – had a relief rally on the optimism that the Obama Administration is moving quickly to stabilise the banking sector — Obama looking at creating a new “bad-asset-bank”. Fed Funds rate left at 0.00%-0.25%. The House nearing the vote to pass the second $819bn stimulus plan that includes emergency spending and tax cuts. Yahoo!, SUN and SAP AG posted better-than-expected earnings. Metals up, gold up, oil down, and bonds down. BHP up 4.59%. RIO down 1.46%. The Dow Futures predict a 22 point fall on Wall Street tonight.

Tabcorp results and placement — Tabcorp have announced interim results and have also launched a $300m institutional placement to “further strengthen Tabcorp’s balance sheet and increase its funding flexibility”. The placement stock does not qualify for their 35c interim dividend and is being done at 580c, a 10% discount to the market price less the dividend (679c minus 35c = 644c). TAH in a trading halt at 649c until the placement is completed. They are in the middle of spending $475m on an expansion of the Sydney Star City casino. There will be a shareholder purchase plan allowing you to buy $5,000 of stock — offer closes 27 Feb.

Other News…

  • Australian Worldwide Exploration (AWE) downgraded its fiscal 2009 output guidance slightly (~3%) to account for an unscheduled disruption to a production facility.
  • Lend Lease (LLC) warned it is likely to write down the carrying value of tangible and intangible assets, affecting the 1st H results. Goodwill relating to Delfin to be reduced about $80m after tax and approximately $210m to be written off on the carrying value of assets in the UK and US.
  • Sino Gold (SGX) posted a good quarterly — 4Q gold production 21% up on-quarter at its flagship Jinfeng Mine. Production and costs were better than most analysts expected.
  • Boral Limited (BLD) had their Baa2 long term and P-2 short-rating rating affirmed. The outlook on BLD’s long-term rating was downgraded from stable to negative.
  • Alesco Corporation’s (ALS) 1st H net profit down 60% at $12.6m, in-line with guidance — no interim dividend. Said they are trading within bank’s covenants and that they are well positioned going forward.
  • Compass Resources (CMR) have gone into voluntary receivership — suspended from official quotation.
  • Boom Logistics (BOL) says that management accounts for the first six months of FY09 are “above budget” and that the operating result is ahead of the first six months of 2008. The after tax operating result will be in the region of $13.7m compared to $13.2m last year.
  • GUD Holdings (GUD) reported sales from continuing ops were down 3% to $237.3m. EBIT down 2%. EBIT/Sales margin increased to 13.7% from 13.6%. Dividend down 3c to 27c. EPS down 14%.
  • EasternStar Gas (ESG) in their quarterly report note a significant upgrade of 2P gas reserves.

Other news…

  • GSJB Were’s resource analyst noted Kazakhstan’s ENRC have agreed to a 41% price reduction in iron ore deliveries to Russia’s Magnitogorsk Iron and Steel Works (MMK). Were’s still predicting a 30% drop in iron ore contracts between Asia and Australia. Asia is however, pushing for a 40% reduction in the price.
  • Stockland Group (SGP) was reported in the AFR to have sold four retail development sites for $44m to pay down debt.

Broker Stuff…

  • Merrill Lynch have a BUY and 3500c target price on Woolworths (WOW) — say the deteriorating economy is not deterring WOW in its investment program. GSJB Were have a HOLD and 3145c target saying they continue to deliver strong sales.
  • Citi say BUY Rio Tinto (RIO) — have a 4600 target and say RIO will pay down debt through asset sales rather than carry out a rights issue. JP Morgan and GSJB Were have a NEUTRAL and a HOLD – price targets 3360c and 4831c.

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