The market is down 82, bit worse than the 70 point fall predicted by the SFE Futures this morning. No one seems impressed by Obama’s grand homilies during the signing of the $787bn stimulus package and the reality is sinking in that it will take some time before the injection gains any traction.

The Dow was down 297. Down all session — down 299 at worst. Closed on lows. All sectors down. Dow retesting November lows. Obama signs the $787 stimulus package whilst not ruling out another similar package. Poor manufacturing data. Homebuilder sentiment still through the floor. One of the main overnight concerns is a warning by Moodys that it may have to downgrade UK and European banks on their exposures to the Eastern European block including sovereign state governments with talk of US$400bn worth of exposure yet to be realised. Financials down 9.8%. Poor economic data out of Japan and the US and GDP downgrades in the UK pushed the oil price down. Energy stocks down 5.6%. Gold up $25. Bonds up. A$ down. Metals all down. Wal-Mart outperformed — up 3.3% on positive earnings.

In Australia:

  • Retail trade numbers today. 4Q sales up 0.8% compared with forecasts of +1.0%. This Q is more important … did the $10.4bn stimulus package carry beyond Christmas. Gerry Harvey says no.
  • CSR has had a profits warning following close on the heels of Boral’s profits warning. Guidance is for EBIT of $310-330m against previous guidance for a number similar to last year ($386m). Implies a 10-15% downgrade. CSR down 17%.
  • IAG Insurance (IAG) have had a profit warning and have announced a capital raising. Raising $500m with $400m from an institutional placement at $3….now 346c. they have seen high levels of claims from natural disasters (2600 from Victorian fires so far) and first half results will be crunched by writedowns on the CGU business and a $100m loss on the sale of their UK business. Insurance margins will be 6% down from guidance of 10%. H1 results to December to see a profit of $4m against $110m last year. Stock in a trading halt. Will get hit tomorrow.
  • Ten Network still in a trading halt whilst it does its institutional placement.
  • Westpac had a Trading Update — No particular surprises. Update seen as positive if anything. WBC down 2.7%.
  • Resources down 2.8% — No one seems to think the OZ Minerals deal is going to go through — brokers note the many regulatory hurdles and reiterate that OZL’s banks could still pull their financing although it would seem imprudent. Down 9.3% or 7.5c to 57c.
  • BHP and RIO down 4.2% and 4.2% following heavy falls in the miners in the US. Oil and metals down on renewed fears about global demand. RIO went ex dividend 101.48c this morning.
  • Industrials down 3.3%. Financials down 2.9%.
  • Property sector down 4.4% — down 22% for the month and down 33% in a rolling quarter. Down 74% from the top of the property sector in February 2007. At lowest levels since 1983.

RESULTS

  • Perpetual Trustees results — DIVIDEND SHOCK – Consensus of $43m — made $41.6m before non-recurring items. The dividend is well below expectations … paid just 40c against 189c last year and forecasts for 120c. PPT is seen as an income stocks by most retail shareholders so this will disappoint. They have changed their dividend payout policy.
  • CSL results — GOOD RESULTS IN LINE — NPAT up 33% at $464m in line with expectations before one offs ($44m of gains on currency and tax). Strong revenue number up 23%. Guidance unchanged — upper end of $810-850m pre currency impact. Revenue guidance upgraded from $4.1bn to $4.6-4.6bn. 30c dividend a bit better than expected. Cash flow up 52%.
  • Woodside Petroleum (WPL) posted FY NPAT of $1.79bn with a final dividend of 55c.
  • Transurban Group (TCL) posted in-line 1H NPAT down 84% but proportional EBITDA down only 6.5% to $284.4m and up 12% excluding one-offs from asset sales and mark-to-market on listed investments. 11c distribution. Market will focus on cost cutting measures and previous traffic numbers.
  • Dexus Property Group (DXS) posted a 1H loss of $954.3m — initially seen as strong result — down from a profit of $432.7m last year – due to asset revaluations and impairments.
  • Macmahon Holdings posted 1H NPAT of $14.1m with an interim dividend of 1.5c. Outlook for the construction sector was positive.
  • The Reject Shop (TRS) posted NPAT up 10% for the 1H09 slightly below expectations, but was a good result for difficult conditions. Confirmed guidance for the FY.
  • Centennial Coal results — BELOW EXPECTATIONS — Made a hedging loss of $50.6m knocking the headline number down from expectations of $98m to $50.7m and the reported profit down 82%. Dividend of 7c versus forecasts of 13c.
  • Other results expected — Macquarie Communications Infrastructure Group, Macquarie Office Trust, Biota, Wotif, Milton Corp, Sunland Group, Talent2 International results.

Broker Stuff…

  • Ten Network kept at SELL and UNDERPERFORM by Credit Credit Suisse, ABN AMRO and Merrill Lynch this morning after announcing their plans for a capital raising. Cut price target’s to 75c, 75c and 60c respectively. Questions surround the ability for the raising to shore up the balance sheet with demand possibly light-on given the CanWest debt problems. TEN, FXJ, APN and SEV have all been regularly featured in the Top Twnety most shorted stocks in the last week.
  • Fosters cut to a price target of 546c by UBS after posting 1H09 NPAT of $411m, up 3.2% on-year yesterday. Credit Credit Suisse, Merrill Lynch and Citi keep OUTPERFORM and BUYs. Most brokers encouraged by the split of the beer and wine businesses.
  • The Dow Jones futures suggest a 23 point rise on Wall Street tonight.

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