The market is up 42 — up 59 at best this morning — underperforming the 85 point rise predicted by the SFE Futures. Financials up only 0.4% – bit disappointing after the 8% rise in US financials Friday ahead of the Obama Administration’s update on the new stimulus package due Monday. The resources sector up 3.7% on the back of BHP and RIO — up 4.1% and 5.8% – following strong performances in the US overnight. Miners all up on the rise in metals prices Friday. Energy stocks mixed on the lower oil price. Industrials up 1.5% — Orica up 7.8% early. Coca-Cola Amatil (CCL) was down 12% on the open as it parent Coca-Cola Co ceased merger talks with Lion Nathan (LNN) over the weekend. LNN up 4% on the announcement. Myer 1st half sales fell 3.7% like-for-like ahead of earlier guidance for a 3.8% fall.
The Dow was up 217. All sectors up. Up 249 at best. Down 11 at worst. The US government’s new banking plan is expected to be announced Monday. Some revisions are being made around a mix of spending and tax cuts. Pressure mounting on Congress to pass the massive economic stimulus legislation. Banks and financials strong — up 8% — ahead of the announcement. The government’s January non-farm payrolls fell more-than-expected. Unemployment rockets up to 7.6%. Resources up. Metals up. Oil down. Gold flat. A$ down.
Rumours on the front of the press this morning that RIO are also possibly about to announce a US$5bn asset sale to Mitsui Japan. The Sunday Times in the UK says RIO will unveil the details of a strategic alliance with Chinalco when RIO releases results on Thursday. Chinalco are going to get a seat on the RIO board. Chinalco are expected to put in as much as US$20bn of cash in return for stakes in mines and projects and shares in RIO which could take their stake to 20%.
Banks all up 1-2% — the NAB has been kept at OUTPERFORM and NEUTRAL by some of the main brokers after Friday’s results — they were generally positive about the result and made the point that higher future revenues will be offset by rising bad debts. The ANZ is having its future earnings forecasts cut by some of the brokers this morning on the back of a forecast rise in their bad and doubtful debts and a potential cut in its dividend.
- Suncorp-Metway (SUN) plummeted 32% on the open as it come out of a trading halt after warning Thursday its interim profit could be down 45% on-year and that it would slash dividends.
- Primary Health Care (PRY) posted 1H net profit of $11.5m. Operating profit up 83% on year beating consensus. 1H EBITDA almost trebled to $155.0. Confirmed guidance of $350m EBITDA. Interim dividend to be 7c.
- BG Group launched a $796m all-cash rival takeover bid for Pure Energy Resources (PES) that trumps another offer for the coal seam gas producer from Arrow Energy (AOE) — has acquired a 10% stake in PES. PES in a trading halt. JV partner Beach Petroleum (BPT) jumped 10% on the news.
- Transfield Services (TSE) wins 5-year NZ$85m Carter Holt contract.
- Asciano Group (AIO) in impairment testing announced no material change in the status of its monetizing units.
- Connect East (CEU) reported Jan average revenue down 5.9% on December. Said daily trips were down 7.1% on December.
- Deep Yellow Limited (DYL) announced it reached agreement with Universal Resources Limited on the terms of an Earth-In JV at Mt IsaBullet point text.
The result season kicks into gear this week…
- RIO has final results on Thursday — questions surrounding a debt-busting deal with Chinalco, a rights issue, asset sales to BHP?
- The Commonwealth Bank has interims on Wednesday — they had a pre-results profit guidance upgrade last week so shouldn’t be too many surprises. Anything they say can and will be used a gauge for the rest of the bank sector.
- JB Hi-Fi interims tomorrow will give us a look at discretionary spending trends. They are a discount retailer and did well initially when the economy started to slide and people moved down the price scale … it will be interesting to see if they too are now feeling the pain.
- Boral has interim results Wednesday — They had a profit warning last week so again … shouldn’t be any surprises.
- Newcrest on Friday … they had a rights issue last week (a successful one) and gave guidance then. Shouldn’t surprise now.
- Leighton Holdings interims on Thursday will be watched for any deterioration in the order book in particular from the Middle East.
- Other results include Cochlear and Computershare .
The Dow Jones Futures are down 54 points at midday.
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