The market is down 84 — poor performance today with a steady decline — underperforming the 3 point rise predicted by the SFE Futures this morning. Property down 2.3% — all the big names down — Westfield Group down 3.6% at midday. They have results this week.
The Dow was down 100 — down 6.2% for the week. Lowest closing level since 2002. They haven’t gone anywhere in 16 years. US Financials down 9% at their session low on fears surrounding the nationalisation of Citigroup and Bank of America — financials hit a 14-year low. January headline CPI in line — core CPI up a bit above expectations. Obama is devising a plan to cut the government deficit in half by the end of his first term. Heads of government and finance from Europe’s largest economies displayed a united front in proposing new broad-based market regulations to deal with the economic crisis. Oil down on fears the global recession is deepening. Metals all down. Gold up. Bonds up.
Fortescue Metals (FMG) is in a trading halt with a Notice received — the story this morning is that rather than do a $500m share issue exclusively to the Chinese they will open it up for institutional investors as well as Chinese steelmaker Hunan Valin Iron and Steel who were/are looking at buying a 14% stake. JP Morgan and Southern Cross equities are likely to act as lead managers for the placement. We now expect an institutional bookbuild to be conducted this week. Hunan Valin Iron and Steel may get its stock from 15.9% shareholder Harbinger.
RIO MAY GO THE RIGHTS ISSUE ROUTE — the shareholder revolt in London against the Chinalco $19.5bn investment deal in RIO is gaining legs – RIO may be considering alternatives to the deal and there’s talk that institutional shareholders are being canvassed about a $10bn rights issue. There are also suggestions that BHP could match the Chinalco bid for some assets and that Jim Leng (the chairman elect) could be returned to the position and Paul Skinner axed. Not good for the BHP or the RIO’s share price today. Resources down 3.3% — BHP and RIO down 4.4% and 6.5% as BHP goes ex dividend.
- OZ Minerals down 2c to 63c as investors lose faith in China’s Minmetal’s 82.5c cash bid going through — and after Michelmore, on the weekend TV program Inside Buiness, essentially said OZL was bust without the Minmetals deal going through (100% downside if the deal folds).
- Caltex down 6.1% on broker downgrades this morning after results Friday. All other energy stocks down on the lower oil price Friday.
- Gold stocks all up on the gold price breaking through the $1000 barrier Friday.
- Small miners mostly down on lower metal prices.
- Industrials down 4.6% — Fairfax down, Virgin Blue down, and Transfield Services down on results. Cochlear down nearly 4.4% at midday having gone ex dividend 80c. Macquarie Infrastructure down 7% and Macquarie Airports down 5.3% on suggestions that the Macquarie stable is being shorted whilst Macquarie Group remains protected by the shorting ban on financials which comes off on Friday week. MQG still fell 14% last week.
- Financials down 2.4% following a turbulent session in the sector in the US Friday where financials were down 9% at one stage on concerns over the need for Citigroup and the Bank of America to be nationalised. Our Banks all down 1-2% around midday. ANZ down 2.5%.
- IRESS Technology up 1.63% on solid 1H profits.
- BlueScope (BSL) down 9.9% this morning after posting 1H NPAT below analyst’s expectations — was $407m compared with the analyst expectations of $477m. 1H NPAT more than doubled thanks to the lower A$ but 2Q exports were hit by the economic downturn.
- Fairfax Media Ltd (FXJ) posted a 1H NPAT loss of $365.3m after major restructuring charges. That’s down from a profit of $196m last year. Loss included a non-cash impairment charge of $447m. Underlying profit down 23% on-year.
- Virgin Blue (VBA) down on 1H results — posted a 1H NPAT loss of $101.4m. 1H revenue was up 12% but the loss was from hedges and derivatives. Result was down from an NPAT profit of $113.3m a year ago. Underlying profit for the half was down 69% to $60m from 193.3m a year ago.
- Transfield Services (TSE) posted its 1H NPAT down 25% on-year to $30.3m from $40.4m. Said lower profit was from higher interest and amortization expenses as a result of acquisitions. Reaffirmed lower end of 10-20% FY profit pre-amortisation growth assuming no further deterioration in market conditions.
- Iress Technology (IRE) posted FY NPAT of $35.6m up 40% saying trading has been challenging. Revenue was up 22%. Expect modest EBITDA growth in the 1H.
- OMH Holdings Limited (OMH) posted a record $115.6m NPAT of $115.6m and a 3c dividend.
- DUET Group Ltd (DUE) posted a 1H NPAT loss of $146m, well below analyst’s expectations — down from an NPAT gain of 69.7m a year ago. Down on mark-to-market on derivative positions.
- Macquarie Airports (MAP) will repay $870m in term debts in September and November. Said preliminary distribution guidance is 27c. Will cease buyback program.
- Pacific Brands (PBG) responded to an ASX query saying impairments could be $200m in the 1H.
- St Barbara (SBM) is out of a trading halt after their $75m placement at 41c/share. SBM down 8.7% or 4c to 42c. The placement was down at 41c.
- Arrow Energy (AOE) renews gas supply HOA with Gladstone LNG project.
- Japan down over 2% as a financial services company goes bankrupt with 338 billion Yen in debts taking the bank sector down around 4%. Toshiba down 9.6% on talk of a capital raising and a 280bn Yen loss.
- The Dow Jones Futures are down 39 at the moment.
MARCUS PADLEY is the Author of the MARCUS TODAY Daily Stockmarket Newsletter.
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