The market is down 35 underperforming the 27 point rise predicted by the SFE Futures this morning. Property down 0.6% with Westfield and Stockland down 1.7% and 3.4%. — one broker cut their recommendation on SGP to NEUTRAL from Buy this morning and price target from 400c to 300c ahead of tomorrow’s results. ING Industrial Fund up 9.1% on asset sales.

Financials down with the banks all down – ANZ down 2.3%. Diversified financials down — Australian Wealth Management down 7% after it posted a 1H loss of $131m and declared no interim dividend. IOOF Holdings down 4.5% on their half year results. Henderson Group down 2.4%.

Industrials up 0.2%. Tabcorp Holdings down 7% as it goes ex dividend. Cochlear up 3% after reporting 1H net profit up 22% and forecasting 20% growth for the FY. JB Hi-Fi up 13% on their 41% increase in 1H profit and 50% interim dividend hike to 15c.

Resources down 0.7% — BHP and RIO both down 0.3% and 3.5% with RIO’s chairman elect resigning over a dispute on how to manage their debt issue. Gold stocks all down on the lower gold price — Sino Gold down 5.2%. Small miners mixed on mixed metal prices. Oil stocks mostly up despite the lower oil price in anticipation of the stimulus package being pushing through the Senate in the next day or two.

The Dow was down 9. Up 35 at best. Down 84 at worst. Quiet day of trading. Broader indexes gained slightly. Ambivalence as the markets eagerly await the stimulus package to be voted through the Senate early this week and the financial rescue package to be announced Tuesday (tonight) by Treasury’s Geithner. Quarterly earnings were mixed. Financials up 1.3% on hopes the rescue plan will benefit the sector. Energy stocks up 0.8% on the hope the stimulus package will increase demand. BHP and RIO mixed in ADR form overnight – BHP up 1.36% and RIO down 7.40%. Metals mixed. Oil down, Gold down. Bonds up. A$ up.

RIO DEAL COMING — RIO getting a lot of press after Chairman Elect Jim Leng resigns over how to handle RIO’s US$38bn debt issue. Consensus forecasts are for a $9.8bn underlying profit on Thursday with talk of a US$5-10bn writedown. RIO was up 265c to 4940c yesterday and is now up 65% since the low on December 5 of 2991c and is up 37% from 3601c three weeks ago.

  • Crown Ltd (CWN) said late Monday that it expects writedowns in its US minority investments to blow a $450m hole in its 1H net profit. Cites the sharp US downturn crimping consumer sentiment and sapping revenue from gaming companies.
  • JB Hi-Fi (JBH) retailer boosted its interim dividend by 50% to 15c on the back of 41% increase in profit for the six months ended Dec 31. 1H net profit of $59m was well ahead of expectations with excellent margin performance. Maintains FY sales guidance of $2.35bn — up 28% on-year. Says Jan and Feb sales have met internal expectations. Says margins are stable despite discounting at competitors. Management said sales were solid.
  • Cochlear Ltd’s (COH) 1H net profit up 22% to $69.9m from $57.1m last year. Sales to December up 19% compared to the same half last year.
  • Ridley Corp (RIC) reported a net loss of $50.0m in the 1H, down from a profit of $8.3m in the same period last year. Revenue up 11% to $451m from $408m in the last half year. Interim dividend unchanged at 3.5c. The loss was from a non-cash loss of $52.2m on the sale of Ridley’s 69% interest in North America-based Ridley Inc and the fall of the A$. Underlying profit was also down to $9.2m from $9.7m.
  • IOOF Holdings (IIF) reported FUMA were down $29.4bn from June to $23.7bn with underlying NPAT of 7.9m. Haven’t declared a dividend pending the AWM merger. Considering a special dividend of 9 to 14 cents in July. Said performance has been well in a difficult environment.
  • Australian Wheat Board (AWB) down 8% on the open after reporting 1H underlying earnings down 55-65% on-year.
  • Australian Agricultural Co (AAC) report FY net profit loss of $38.7m.

Other items…

  • British Group’s $538m all-cash offer for Pure Energy (PES) trumped Arrow Energy’s (AOE) existing offer but Merrill Lynch points out that Arrow owns 19.9% of PES and Shell owns a reported 10%, so the deal may not be done just yet.
  • Merrill Lynch forecast a 20% fall in Fy09-10 iron ore contract prices versus the market’s 30% consensus. “There is little upside risk to these views. But if there is further weakness in global financial markets prior to settlement, expect a larger cut.”
  • BHP upgraded to BUY by Goldman Sachs JB Were whilst price target is boosted to 1502c from 1237c. See BHP as the “long-term winner from mining industry distress.” In the UK the Royal Bank of Scotland downgrades BHP to HOLD from Buy and cuts its price target from 1300p to 1200p – said the outlook for BHP’s product suite has become more cautious.
  • The Dow Jones futures suggest a 57 point fall on Wall Street tonight.

MARCUS PADLEY is the Author of the MARCUS TODAY Daily Stockmarket Newsletter.

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