The market is up 17 — up 28 at best – basically in-line with the 20 point rise predicted by the SFE Futures this morning. Pretty quiet — not much news apart from RIO’s Chinalco deal and a few results. RIO is down 4.1%. BHP down 0.8%. Resources underperforming this morning – down 0.4% on lower metal prices and a drop in the oil price.

The Dow was down 6. Down all session – negative 246 at worst. Massive rally in the last few minutes on Reuters reporting Obama is nutting-out a program to subsidize mortgage payments for those home owners who are under water. Pulled back from a 3% loss to modest gains across the broader index. The lack of transparency about the bank’s “bad assets” and how big their losses really are continues to dog the market. January retail sales up more-than-expected. Coca-Cola beat consensus with results. BHP and RIO down 0.78%and 0.81%. Metals down. Oil down 5%. Gold up $4.70. Bonds down. A$ down 0.35%. January retail sales up a surprising 1% after a 2.7% drop in December. Initial jobless claims down to 623,000 — analysts were expecting 610,000. December Business inventories down 1.3% — the biggest reduction in seven years — a much bigger fall than the 0.9% drop analysts expected. The Dow Jones futures suggest a 41 point fall on Wall Street tonight.

The US Market is closed on Monday for the President’s Day holiday.

  • Oz Minerals announced they will incur writedowns of between $2.3bn-$2.8bn in FY08 accounts, including asset impairments. Financials up 0.7% — banks mixed. Still suspended.
  • ANZ up 6% early ruling out a capital raising and the dilutionary effect on shareholder equity — noted their tier 1 ratio stood at 8.35%, well above regulatory requirements.
  • Property sector down 3.2%. Westfield down another 4.1%. DXS down 5.8%.
  • Last day to buy the CBA before it goes ex dividend 113c on Monday. Unchanged today at 3095c.
  • The government’s $41.5bn fiscal stimulus package has just been approved in the Senate.
  • RIO is down 3.5% first thing this morning. Snapshot view is that the deal is good for RIO and the share price would be smashed without it…but it has rallied from 4775c to 5200c or 37% in the three weeks ahead of the deal. So better to travel than arrive. Despite that there are broker and shareholder comments that the management are a disgrace for getting them in this position in the first place. They have bought assets at the top of the cycle, rejected the opportunity to make good on their mistake by not engaging BHP in takeover talks which would have made them one of the premier resources companies in the world and then they engage the Chinese and sell them the crown jewels at the bottom of the cycle. Results were a bit ahead of consensus yesterday but the 2nd half of 2008 is history and the 1st half of 2009 is not going to look nearly so good. The deal needs government approval and there will be a shareholders vote in May. BHP is down 0.9%.
  • Newcrest Mining Ltd (NCM) posted 1H NPAT of $154m. Headline and underlying profit in-line with guidance. Said increased profit due largely to higher gold prices. Said input cost should decline and that the outlook for gold was good. Gearing up to 16% from 8%.
  • Paladin Energy (PDN) reported a 1H net loss of US$475.6m with a US$527.6m impairment on Mt Isa assets. They had a loss of $25.8m last year. Gross profit for the 1H was US$28.4m, up from US$6.8m a year ago reflecting improved operating performance at its Langer Heinrich uranium operation in Namibia. No dividend.
  • Western Areas (WSA) in a trading halt pending an announcement regarding a Nickel Concentrate Offtake.
  • AMP (AMP) up 0.59% early drops 2H dividend guidance to 16cps — below consensus. Consensus 2H dividend was 20c against a 1H of 24c. Flags underlying profit at $800m in-line with consensus. AMP likely to fall on the news of the dividend cut.
  • CSL Limited (CSL) dropped yesterday after Spain ordered a temporary halt the use of cervical cancer vaccine Gardasil.

BROKER STUFF…

  • RIO’s price target upped by most brokers by 10-20% this morning on the back of the Chinalco deal and their FY results. Citi boosted to a 6500c target, UBS to 6000c, ABN AMRO to 5194c and Goldman Sachs to 4693c. Most keep their BUY recommendation.
  • Leighton Holdings kept at UNDERPERFORM or SELL after their interim results yesterday. Merrill Lynch drop price target to 2248c, Citi drop to 1600c. Goldmans keeps 3007c. Most of the analysts concerned over the low quality of the earnings and the imminent fall in the non-residential construction and housing markets.

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