The market is up 47 outperforming the 19 point fall predicted by the SFE Futures this morning. All sectors up. Strong performance given the lacklustre response to Obama’s mortgage recovery plan overnight and the abominable economic news globally.
The Dow was up 3. Up 65 at best. Down 73 at worst. Only consumer staples and technology stocks up. Housing Finance and Building permits numbers at record lows. FOMC minutes saw the Fed lower GDP forecasts. Some had hoped they would signal some economic improvement in January but it hasn’t happened. Obama released his much anticipated mortgage relief plan with little impact on the markets. Gathering concerns about European banks having to have massive bailouts with exposures to Eastern Europe. US financials at a 14 year low. BHP down 0.59% in ADR form. RIO up 4.55% in ADR form. Metals mixed. Oil down 0.8%. Bonds down, A$ up. Gold up yet again … can do no wrong.
Suggestions of a renewed bid for RIO from BHP may overhang the BHP share price. Hence the strength in RIO overnight and the weakness in BHP. If Chinalco get 18% of RIO BHP will be shut out, they have a window of opportunity that will close after a RIO shareholders vote in May, so maybe they are thinking about trying something. They can’t bid until end November — but the suggestion is that they will instead offer to buy Escondida and other assets and offer to do what Chinalco is doing – which puts pressure on BHP B/S and lifts debt worries at RIO. More palatable for Wayne Swan and maybe for RIO shareholders. Ever since BHP pulled out of the bid for RIO, BHP has been sitting at a huge premium to RIO compared to the historic average. That gap is narrowing daily as people reverse the switch out of RIO and into BHP.
- Ten Network getting thumped (down 17% to 77c) after it abandoned its plans to sell 120m shares at a minimum of 75c after a lack of demand for the shares in what they call difficult conditions.
- Financials up 1.4% — banks up despite a weak US financial sector (14 year low). WBC’s positive trading update yesterday helps. City Pacific up 32% on confirming an extension of finance facilities. Bank of Queensland up 7% on announcing normalized NPAT for 1H09 up 25% in a trading update.
- Property up 2.3% after yesterday’s falls — Stockland up 6.5% just before midday on no news. The stock is close to a 16 year low. Westfield up 2.0%.
- Lion Nathan (LNN) up a touch on a reasonable trading update which confirms earnings guidance.
- Fortescue Metals up another 24c to 323c as they confirm talks about a strategic investment thought to be worth $500m initially and backed by The China Investment Corp.
- St Barbara Mines (SBM) are conducting a private placement to sophisticated investors raising $70-75m … the placement is specifically directed at paying off a convertible (reducing financing costs). The stock is in a trading halt whilst they do the placement (probably come back on Monday).
- The Dow Jones futures suggest a 7 point rise on Wall Street tonight.
- AMP (AMP) — Profit down 41% to $581m (v $985m) with in-line with guidance from a week ago but ahead of consensus for $509m.
- Santos (STO) — Good results ahead of guidance — Underlying profit of $571.6m versus consensus of $534m. Higher asset impairment charges than expected at $139m but not that big a deal.
- Lihir (LGL) — Results in line. Bit weaker than some expected. $109.3m underlying (v loss of $24m) but includes a $60m loss on hedges inherited from the Equigold acquisition. Lihir itself is unhedged.
- Iluka (ILU) — Up 9% early on results in line with guidance. NPAT up 52% to $77.5m from $51.1m. Excluding significant items profit was $61.7m compared to guidance of $60m in December. Sales up 10%. No dividend. The stock is flying as the management suggest they are at some sort of transition point — “The minerals sands performance is improving, we have got a strong balance sheet such that we have room, in my view, for capital management options to emerge in the future”.
- Adelaide Brighton Cement (ABC) — NPAT up 6.1% to $120.8m against guidance of $118m to $123m made in November. Cement volumes up 9% versus guidance of 5-8%. Sales up 15%.
- Healthscope (HSP) — posted in-line 1H NPAT double that of last year at $38.4m – profit up 9% before non-recurring items. Strong revenue growth across all hospitals and pathology. Interim dividend of 10.5c.
- ING Office Fund (IOF) — reported a $445.7m net loss for its 1H09 from a $140.4m net profit a year earlier. Good result with core NPAT above expectations.
- Kingsgate Consolidated (KCN) — Loss of $11.9mm against forecasts for a loss of $14m. Results were after hours last night.
- Spotless Group (SPT) posted a 34% jump in 1H NPAT to $17.4m. NPAT below some broker forecasts. Remains on the hunt for acquisition opportunities. Interim dividend of 5c — down 52%.
- Cabcharge (CAB) posted solid 1H09 revenue of $90.7m with 1H09 NPAT of $32.2m with an interim dividend of 17c — cautiously optimistic. Result slightly above most expectations.
- Australian Infrastructure Fund (AIX) posted 1H09 NPAT down 18% to $114.2m. Revenue down 11% to $142.9m. Melbourne airport stronger than expected lifting result above Goldman Sachs JB Were’s expectations. Unchanged dividend of 9c.
- Macquarie Infrastructure Group (MIG) — No surprises — posted a $1.27bn loss in the 1H09 — down from a $1.03bn profit a year ago. Had already announced an unchanged 10c distribution.
- Sims Metal Management (SGM) post 1H EBITDA up 3% at $254.1m – net loss was in-line with expectations. Strong cash flows and modest debt on the balance sheet. No specific guidance.
MARCUS PADLEY is the Author of the MARCUS TODAY Daily Stockmarket Newsletter.
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