The market is down 68. The SFE futures suggested a 51 point fall in the market this morning. Most sectors down. Resources and industrials getting hit the hardest — down 2.3% and 2.8%. BHP and RIO down 2.6% and 1.2%. Property trusts doing OK — up 0.2%. Energy stocks down 1.7% after recent strong gains. Gold stocks mixed — NCM and LGL actually up despite the lower gold price overnight.
The Dow was down 155. Down all session — 164 at worst. Financials down 6.8% as 4 of the major banks that were determined as financially fit last week by the government’s stress-testing have announced they will raise $1.5-$2.5bn in capital through issuing stock to assist in paying TARP funds back to the government. Microsoft had its first ever debt offering. Telecom stocks did the best. BHP and RIO down in ADR form overnight — 2.57% and 2.44% respectively. Metals all down. Oil down. Gold down. Bonds up.
Fortescue Metals (FMG) jumped 43c or 16.3% yesterday to 307c after Andrew Forrest spoke in China about getting a listing on the Shanghai Stock Exchange. He also raised the prospect of raising funding from Chinese partners other than Hunan Valin. This follows the rather disappointing quarterly production numbers at the end of last month and comes ahead of a decision on iron ore price negotiations between the Chinese and BHP and RIO. This morning FMG is down 21c to 286c. The reality is that to get further Chinese partners they will most likely have to issue more shares, diluting existing shareholders. But getting financing is not the issue – whether there is enough iron ore demand and the iron ore price is high enough to warrant any expansion is the issue.
- Gloucester Coal (GCL) appoints PricewaterhouseCoopers to assess the Noble’s $6.00/share offer for GCL and Gloucester’s proposed merger with Whitehaven Coal.
- AWB Limited (AWB) down over 5% on a profit warning — lowered 1H NPAT to $8-9m from $10-12m — lowered due to accounting errors.
- Oil Search’s (OSH) chairman said they are in the strongest financial position ever – but said that if the oil price stays subdued, revenue in the FY09 will be lower than FY08. OSH’s production outlook for FY09 is 8-8.3mboe.
- Crown (CWN) reached agreement with the Victorian state government to expand its namesake casino in Melbourne. Plans to spend $46m upgrading its facilities to accommodate more gaming tables.
- SP Ausnet (SPN) in a trading halt ahead of a $415m 1-for-4 renounceable rights issue announcement. Posted FY09 profit from continuing operations down 6.7% to $146.9m on-year. Revenue up 11% to $1.17bn. FY10 DPS guidance was below consensus expectations at 8c – a 33% cut on FY09 levels.
- Carnarvon Petroleum (CVN) discovers a significant oil deposit flowing at 1,220bopd.
- In the government’s budget tonight, economists expecting GDP to be forecast at +0.7% growth for the 2009-10 period. Expect government to flag +0.1% GDP growth and CPI at +3.1% for the 2008-09 year.
- WorleyParson’s (WOR) closest international comparables, Flour, Foster Wheeler and Jacobs, have all reduced EPS guidance on project delays and cancellations.
- Seek (SEK) released their “Seek Employment Index” data — April online job ads were down 51% yoy and down 41% in the 2H to-date — although the April data suggests a flattening of declines due to the Easter Holiday timing, the more telling seasonally adjusted figures show that the decline in new jobs ads is getting worse.
- Merrill Lynch boost Lend Lease (LLC) price target to 720c from 600c to reflect their $7.23 valuation on net assets and $7.19 overall valuation. Said the assets sales were required.
- UBS ups Santos (STO) to NEUTRAL from Sell after STO announced their plans to raise $3bn in capital yesterday.
- Fortescue Metals’ (FMG) price target cut to 200c from 220c by Citi — keeps a SELL on the iron ore miner — see risk to both production and realized price and the negative effect of the appreciating A$. Cut to UNDERWEIGHT by JP Morgan.
- Citi keeps Copper as their number one commodity and Aluminum as their worst.
The Dow Futures suggest a 80 point fall on Wall Street.
MARCUS PADLEY is the Author of the MARCUS TODAY Daily Stockmarket Newsletter.
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