The market is down 26 – down 59 at worst – in-line now with the 22 point fall predicted by the SFE Futures this morning. Most sectors down. Only energy, consumer staples and healthcare up slightly. Industrials down 2.1% with Brambles down 7% early on posting 1H NPAT of US$195.3m. Challenger up 6.4% on normalised net profit up 3.9% to $105.9m. Gold stocks mixed on the lower gold price. Energy stocks mostly down despite the 10% jump in the oil price on March contract short covering. PanAust up 8% early on announcing production costs. Financials down 1.1%. Banks mixed. CBA down 4.1% after going ex dividend 113c.

The Dow was down 82. Up 6 at best. Down 92 at worst. Dow at its lowest close since last November.Dow down 5.2% for the week.Volumes low going into the long weekend. Financials down 10.4% for the week – down 4.2% Friday. Obama’s plan to assist flailing homeowners and stem foreclosures reportedly will be announced Wednesday. PepsiCo posted in-line results. The G-7 finance ministers vowed to tackle the “severe” economic downturn, but didn’t say much about how. Senior White House advisor David Axelrod said the recession in the US is gaining momentum and that the US$787bn stimulus package would take time to kick in. US holiday Monday foe President’s Day – no trading in the US tonight.

Resources down 1.0%. BHP down 1.3%. RIO down 1.7% with lots of press over the weekend outlining that the US$19.5bn Chinalco solution isn’t a done deal and requires many regulatory hurdles to be overcome. Brokers general positive about the deal but tentative over its size and complexity and the fact that it far outweighs RIO’s funding needs and might not go through. Traders taking profits from the big rises in RIO running up to the announcement of the deal.

Main issues today are the 1H results:

  • Wesfarmers up nearly 2% on 1H results at the high-end of the guidance range at NPAT $879m. They flagged them at the time of their recent 1350c rights issue. 50c dividend in-line with expectations. Revenue more than doubled from a year ago thanks to the Coles acquisition. Food & Liquor improving at last after a relentless loss of market share to Woolworths post acquisition of Coles.
  • Bendigo and Adelaide Bank’s (BEN) results looks about 5% below expectations. Bad debts better than expected. Tier 1 is 7.99% – OK. NPAT up 42.4%. Revenue up 46.7%. No $100m capital raising as expected in the press today.
  • Challenger FSG results in line with NPAT loss of $108m (guidance was for a worse loss of about negative $117m). Funds Management result less than expected. Life & Mortgages better than expected. Dividend of 5c as expected.
  • Futuris results in line with guidance with underlying NPAT of -$22.1m and headline NPAT of -$329m after a non recurring item of -$307m. Gearing 112%. No dividend. No breach of finance covenants. Cash flow down 50%. Trading update says ongoing weakness in demand and the bush fires and QLD flooding will impact on their insurance business.

Broker Stuff…

  • RIO kept at OUTPERFORM and BUY with targets up to 6000c, by Berstein, Macquarie Group and Merrill Lynch. Mostly say the Chinalco deal is positive but are cautious of the regulatory approvals required.
  • Paladin (PDN) kept at NEUTRAL by Macquarie Group and Merrill Lynch with price targets of 263c and 350c respectively. Said the operating result was reasonable, but that commissioning risks remain over the next 3-6 months.
  • Newcrest (NCM) kept at NEUTRAL and HOLD with price targets of 2500c and 3191c by Macquarie Group and ABN AMRO AMRO. Note cash in hand, record high EBITDA forecast for the 2H09 and strong balance sheet. Their favourite gold play.

Other news…

  • GPT Group (GPT) responded to a price query saying its expects profit to be in-line with October forecast, with $700m in writedowns on the Babcock JV with a total 11% reduction in portfolio book value. 2008 distribution to be unaffected.
  • PaperlinX is in a trading halt until Wednesday as Nippon Paper consider buying PPX assets for $600m. They have also announced a new deal with lenders.
  • Citi say an ANZ equity raising is still likely.
  • RBA minutes to be released Tuesday – consensus is for another 50bp rates cut on March 3rd.
  • Australian economics of note this week include Lending finance numbers today and Retail Sales on Wednesday.
  • US Economics have some big hitters this week including FOMC Minutes on Wednesday, Housing numbers, Producer Prices and Inflation figures on Friday. Their company results season is cooling down.
  • Westpac Bank have a trading update on Thursday.
  • The Dow Jones futures suggest a 33 point fall on Wall Street which is closed tonight and open again on Tuesday.

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