The market is down 35 points. The SFE Futures were predicting a 21 point fall this morning. Resources the biggest fallers — down 3.1%. Financials and property stocks down following their US counterparts had a rough session on Wall Street overnight. We are expecting a decision from the RBA on interest rate at 2:30pm. Economists believe we will either see a 25bps cut or no change.

Dow down 41. Down all session — negative 155 at worst. Market down for the first time in 5 days. Dow down 2.3% at worst. Markets rallied in the afternoon with the broad based paring of losses. Financials down 2.9%. A reputable analyst provides a negative assessment of the banks. Fears regarding the balance sheets of the banks continue. There are fears about the quarterly results season that start this week. Material and energy stocks down with the fall in gold, oil and the base metals. Technology stocks down 1.1% as IBM withdraws its bid for Sun Microsystems. Healthcare, industrial and defensive stocks outperform. Alcoa kicking off the quarterly reporting season tonight. Bonds down. A$/US$ down.

Rio Tinto was down 11% in ADR form and in the UK overnight after The UK Times reported the company was drawing up a contingency plan to undertake a large equity raising should the Chinalco deal not be approved by the Australian government. The Sunday Times suggests the rights issue could be as big as $US8bn, while The Financial Times suggested it might be up to $US10bn which also pointed out that Chinalco is opposed to the convertible bond being cancelled in favour of the rights issue and would potentially walk away if it is proposed.

Telstra (TLS) up 9c or 2.8% to 330c on the government’s National Broadband Network decision to scrap the tender process (none of the bidders in the NBN proposal process met its requirements) and create a new majority owned public-private company to build the NBN network. They will be seeking co-investors. Good for Telstra who are no longer cut out of the NBN build, an issue that had dropped the TLS price from 380c to 300c in the last month and a bit. Despite this good news the government say they are still looking at regulatory reform, including the possibility for “functional separation” of Telstra. TLS note that its existing network of ducts and pits have now become highly valuable assets. Good but not great for Telstra.

  • Iluka Resources (ILU) in its sales and production update said it will adjust its production base on weak demand. Said demand recovery was taking longer than expected. Said they will cut zircon production by 20% and Rutile production by 10% in 2009.
  • Equinox Minerals (EQN) launched it equity offering — expecting to raise Cdn$160m.
  • Henderson Group’s (HGG) cash offer for New Star Asset Management Group has been declared wholly unconditional.
  • Kagara Limited (KZL) said they are not aware of any information concerning the recent trading of its shares.
  • Futuris Corp (FCL) in a response to an ASX price query said it was comfortable with market expectations for FY09 underlying earnings of $26m-$40m.
  • IBA Health Group (IBA) note iSOFT wins a $3.2m contract with Germany’s Damp Holdings.
  • Linc Energy (LNC) appoints Rob Stratford as Chief Financial Officer.

Other…

  • Bendigo and Adelaide Bank (BEN) down another 5.7% after they released their 3Q trading update yesterday — brokers putting out a few SELL recommendations this morning.
  • Origin Energy (ORG) kept at Buy with a 2090c price target saying the stock remains their preferred utility.
  • Gold stocks down again as the Gold price breaks convincingly through the March low of $885 and hits $872 down $24. Next resistance is the January low of $805.
  • Macquarie Equities have upped their recommendation on Woodside Petroleum (WPL) to BUY from SELL
  • Copper fell off a five month high after a 9% rise last week. Macquarie say copper usage will drop 9.2% in 2009, the biggest drop since 1975, on a slump in housing and auto markets.

The Dow Futures suggest a 33 point fall on Wall Street.

MARCUS PADLEY is the Author of the MARCUS TODAY Daily Stockmarket Newsletter.

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