The market is down 37 — That compares to the 64-point fall predicted by the SFE Futures this morning. Property down the most. Westfield down 6% in early trading having gone ex-dividend toady. Financials down with the banks all down 1-2%. Resources down 2.1% with the fall in metals overnight and on the back of poor US economic numbers. BHP down 2.5% and RIO up 6.8% as it confirms it’s been in talks with Chinalco about the sale of its minority stakes in some of its operations. If they do a deal there it reduces the need for the rumoured $6bn right issue. In the last week it fell from a high of 4520c to a low of 3887c. Now 4511c. Fortescue flying — up 9% — on the back of its 1H profit result late Friday — $1.097bn was in-line with expectations with a strong cash position and record production. Gold stocks mostly up on the higher gold price — Newcrest in a trading halt looking to raise $500 million in a fully underwritten equity placement.

Dow down 148. Up 46 at best — down 188 at worst. Down 0.7% for the week. Market down for the second session in a row and down for the 4th straight week in a row. GDP numbers were a bit better-than-expected. Consumer sentiment down — government spending slightly up. Financials down 2.5%. Skepticism surrounding Obama’s so-called “Band-Bank-Plan” which would buy toxic securities off the balance sheets of the banks. There seems to be no clear solution for the banks at this stage. Regional banks down 6.5%. Diversified financials down 1.8%. Energy stocks down 1.2% despite oil being up slightly. Exxon Mobil posted better-than-expected 4Q results but still finished down for the session.

RIO and Chinalco talks confirmed — More stories that Chinalco is going to inject into RIO. RIO has confirmed the story but notes no deal has been struck yet and may not be. It is good for RIO this morning to have an interested buyer/backer as it reduces the chances of an Xstrata-style deeply discounted rights issue at some point in the future. They have about $8bn of debt repayments to make this year prompting talk of a US$6bn rights issue. There is also talk they are about to sell US$1.6bn of assets to Vale (Brazil) the biggest iron ore producer in the world.

  • Arrow Energy (AOE) reported it produced less gas in the December quarter than in the September quarter. Said the remainder of the sale of its 30% stake in Royal Dutch Shell (RDSA) will be completed by mid February — proceeds of US$155m expected.
  • Newcrest Mining (NCM) is looking to raise $500 million in a fully underwritten equity placement at a price of $27.00 a share — roughly a 13% discount — to strengthen balance sheet and enhance financial flexibility.
  • Murchison Metals (MMX) in a project update said the Rocklea Resource is estimated at 100m tons.
  • Mirabela Nickel’s (MBN) 4Q activities and cash flow report said construction is on-track for a mid 2009 start-up. Said their Santa Rita project finance is almost finalized.
  • Henderson Group (HGG) up 17% on Merrill Lynch recommendation upgrade to BUY with a 185c target price.

Broker stuff…

  • UBS cuts their Telstra target price from 525c to 455c. Retains BUY. But then they also downgrade to a SELL on Oz Minerals … a little late it seems. 50c target price.
  • Macquarie Group and Citi keep their OUTPERFORM and BUY on Harvey Norman after their 2Q 2009 sales numbers. Keep their 303c and 280c targets. Macquarie Group said they can’t resist a “bargain”.
  • Macquarie Group said Orica are off to a good start in a tough year — maintain UNDERPERFORM with 1521c target. Citigroup keep a BUY recommendation but drop their target to 1778c from 1826c due to a cut in earnings forecasts.

Other news…

  • Treasurer Wayne Swan concedes a budget deficit is inevitable as the financial crisis and global recession is likely to wipe $50bn from company taxes over the next four years.
  • Merrills Lynch analysts say that the credit growth for the banks have gone negative for the first time since 1992. Annual system credit growth up 6.7% YoY in December, down from 8.2% in November.
  • The government’s $10.4bn December stimulus package has boosted retails sales through January — heavy discounting also helped.
  • The RBA tipped to drop rates about 100bps tomorrow, possibly by 125bp.
  • On the Diary this week — Results season starts — BHP interims on Wednesday — RBA Statement on monetary policy on Friday — US Jobs numbers on Friday.

Most brokers have Super Bowl 43 on the TV this morning.

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