The market is down 57 — triple the 25 point fall predicted by the SFE Futures this morning. Industrials were the only sector up with Brambles outperforming, but most sectors struggling, most notably Property trusts. Energy stocks down despite the oil price bouncing overnight.

The Dow was down 37. Volatile trading with little direction. Financial viability of General Motors and Chrysler still questionable — analysts now unsure about an earnings uplift in the 2H09. US Car manufacturers down — Ford down 3.72%. US Auto sales outlook remains depressing. Toyota may ask the Japanese government for aid. January pending home sales down more-than-expected. Federal Reserve Chairman Ben Bernanke told Congress they must stabilize the financial markets or experience prolonged stagflation. Xstrata fell 4.6% on approval of a $5.9bn rights issue. The rights price was at 210c – a 66% discount to the market price. The share price looks like its down 44.7% but is actually down 4.6% on its ex rights price of 348p against a previous share price of 640p. BHP and RIO both up in ADR form – 4.44% and 0.84% respectively. Metals up. Oil up 3.7%. Gold down $26.40. US Bonds down. A$ up to 63.73. The Dow Jones futures suggest a 12 point rise on Wall Street tonight.

4th Q GDP Number is a bit of a horror — against consensus estimates for a small positive number of +0.2% the number has come out at -0.5%. You wonder why the RBA didn’t cut interest rates yesterday. Of course these GDP numbers are for the 4th Q. We are already in the 1st Q of 2009 and it is quite clear that we are therefore, with a negative Q last Q already in recession. You have to bear in mind the GDP numbers announced today are historic data and 2-5 months out of date… so they are largely irrelevant. What we really need to see is next Q GDP numbers… not last year’s.

This sort of number has more impact on international investors who can choose to invest anywhere in the world and who own huge mobile slugs of our equity market than it does on domestic institutions that are stuck in our market and just trying to do the best within those confines. You will see a number of GDP downgrades from economists today and tomorrow and that won’t make great reading for international investors in our market.

Quiet day on the news front:

  • Asciano (AIO) responded to an ASX price query by saying there is no change in their monetization process.
  • AMP announced after close of market yesterday that it will attempt to raise around $300m via the issue of new listed debt securities.
  • Mirabela Nickel (MBN) signed a $150m agreement for a senior secured term loan facility for its Santa Rita nickel sulfide project.
  • Lihir Gold (LGL) launches a US$325m institutional placement to fund growth opportunities and speed up expansion – trading halt remains.
  • Arrow Energy (AOE) it is continuing to assess its options in relation to its takeover bid for Pure Energy Resources (PES) despite BG’s higher bid. Arrow holds 20% of Pure and BG already has 29% of the target.
  • Corporate Express (CXP) appoints Paul Hitchcock as CEO.
  • Molopo Australia (MPO) announced a positive update on their Mungi-20a horizontal well flowrates.
  • ConnectEast says he has no idea why its shares have fallen 30% in 2 days.

Broker Stuff:

  • Macquarie Equities downgrades Western Areas (WSA) to Neutral with 360c target price – WSA announced a net loss of $12.3m. They continue to regard WSA as “the highest-quality nickel asset” in their coverage universe.
  • ABN AMRO have cut their target price on Rio Tinto (RIO) to 4581c from 5194c after cutting earnings forecasts by 4% and 7% in FY09 and FY10.
  • Citi maintain AMP Ltd at HOLD but cut target price to 440c from 530c to reflect the impact of their $300m debt raising.

Other:

  • Charlie Aitken of Southern Cross Equities has labeled BlueScope (BSL) and OneSteel (OST) as stocks representing exceptional value.
  • Everyone throwing out technical support levels for the ASX 200 after it broke the November lows. Now 3175…arbitrary 3100 level seems to be the next support although the relevance of looking back 10 years and treating that as a relevant support is debatable.

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