The market is up 32. The SFE Futures were up 4 this morning.

The Dow closed down 33 points and was down 95 at worst. The market seems to have shrugged off a downgrade to global growth by the IMF which didn’t go as far as the World’s Bank’s cut last week and has forced Wayne Swan to defend the government’s budget surplus forecast again as the IMF predict a 14% fall in non-fuel commodity prices this year. EU finance ministers are taking an unexpectedly hard line with Greek bond holders — it seems they are prepared to risk Greek default and the market is quickly rationalizing it and suggesting that it will be a lone domino when it falls with Italian and Spanish bond markets seemingly unconcerned. Gold fell $12.80 and Metals were mostly up. The Aussie dollar fell slightly to 104.90c.                                                                                                                                                  

Main points

  • CPI numbers were a bit better than expected at the headline which was unchanged (est +0.2%) and +3.1% for the year down from 3.5% whilst the underlying (trimmed mean) number was +2.6% on the year, a bit higher than the 2.5% expected but still in the middle of the RBA’s target band. The A$ has initially risen a bit. The number is being read as slightly reducing the chances of a 25bp rate cut from the RBA on February 17.
  • Monadelphous Group (MND) provided a trading update after the market closed yesterday. They have upgraded their guidance and now expect first 2012 revenue of $870m and NPAT of $55-58m. MND up 3.3% to 2223c.
  • Rio Tinto (RIO) has paid $302m to taken a majority stake, 51%, in Ivanhoe Mines. Citi maintain their Buy recommendation and 9500c target price on RIO saying it is one of their top picks. RIO up 17c to 6854c.
  • Atlas Iron (AGO) has cut its production targets for the year to June 30 to 5.5 to 5.7 Mt, down from 6.0 Mt due to the impact of Tropical Cyclone Heidi I the Pilbara. AGO down 4.2% to 312c.
  • Lynas Corp (LYC) is raising $US225m through an issue of convertible bonds, providing them with sufficient funds to complete building the first phase of its plant in Malaysia. LYC up 3.5c to 131.5c.
  • The takeover of Pacific Brands (PBG) by private equity group KKR appears to have stalled with doubts raised over whether KKR is actually interested in completing the deal. But KKR may also be waiting for PBG to report their half year results on February 24 before proceeding. PBG unchanged at 63c.
  • Median Australian house prices rose slightly in the December quarter for the first time since late 2010. The national median house price rose from $533,521 to $533,650, while unit prices declined 0.5%.
  • The IMF downgraded its global growth forecasts. They now expect the world economy to grow by 3.25% this year, down from earlier estimates of 4%. It follows the World Bank downgrade last week and was not wholly unexpected

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