The market is down 71 underperforming the 41 point rise predicted by the SFE Futures this morning. All sectors down. Resources outperforming on the back of Rio Tinto’s announcement it will cut 14,000 jobs as part of an attempt to pay down US$10bn of its US$38.9bn in debt by the end of next year — will also cut capex in half to $4bn. RIO was up 29.29% in the US and up 20% in the UK. RIO only up 8.4% on the ASX. BHP down 1.2%. Bit disappointing really — basically, Rio’s dividend will be maintained and debt is a bit less than we thought.

Oz Minerals copping negative broker research this morning — they put out an update on their debt position last night. They talk about likely asset sales. They remain in a trading halt until December 29th.

Gold stocks outperforming on the higher gold price — Sino Gold up 14.5% on its project guidance and update. Bluescope Steel down 23.6% on completion of its $300m institutional capital raising. OneSteel down 3.2% on rumours about OST mulling over their own capital raising.

Big industrial copping it today — Wesfarmers down 4.3% on talk it may initiate a $1bn capital raising at a deeply discounted $12 per share (26% discount to current share price). CSL Limited down 6.2% on a Research and Development Briefing. Leighton Holdings down 7.5% on concerns about the global downturn hitting all of its business sectors including its exposure to the Middle East. Cochlear down 7.3%. Telstra down 2.6%. Woolworths down 5.0%. Fosters down 3.9%.

The Dow was up 70. Up 188 at best. Down 45 at worst. 3 stocks up for every 2 down. Volumes light. 8 out of 10 sectors up. October wholesale inventories down the most since 2001. November budget deficit the biggest ever. Choppy trading — any news on the auto bailout was the main catalyst for buying or selling. Financials down 0.8% on fears of fresh rounds of capital raisings required by banks. Energy and Materials did best — up 4.7% and 2.7%. Coal producers up significantly. Metals mostly up overnight. Oil price up $1.10 to $43.10. Gold up $34.60 to $808.80. Bonds down with the 10 year yield up to 2.7%. A$ down 0.4% against the US dollar.

The AFR reports ABC Learning’s (ABS) receivers have agreed to pump another $35m into the company until receiver McGrathNicol can find a buyer for 720 centers. Altogether, Commonwealth Bank (CBA), Westpac (WBC), ANZ Bank (ANZ) and NAB (NAB) have an exposure of more than $1bn to ABS.

  • Westpac Bank (WBC) has held its AGM and announces it is facing rising bad debts and slowing loan growth due to the challenging economic environment and remains confident about turning it around in the future. Chairman Ted Evans expects balance sheet growth to slow in this economic environment.
  • Bank of Queensland (BOQ) also held its AGM and announced a share purchase plan that will allow shareholders to apply for up to $10,000 worth of shares. The maximum price shareholders will pay is 1008c a share — a 7.5% discount to yesterday’s closing price. They also say deposits are up 34% on last year and that impairment charges are steady.
  • Macquarie Group (MQG) has priced US$1.7bn of 5 year bonds according to the International Financial Review.
  • OZ Minerals (OZL) says it has not engaged in misleading and deceptive conduct and has acted in compliance with corporations’ law in response to the planned legal action again the company.
  • ING Industrial Fund (IIF) says it is looking to cut its gearing in light of a lower $A, volatile exchange rates and falling asset values.
  • Downer EDI (DOW) has secured a $45m locomotive deal with Queensland’s QR Ltd.
  • Fortescue Metals (FMG) says it is reviewing the status of its shipping book position after the suspension of some long term contracts. It also says it isn’t in any advanced talks with anyone.
  • ConnectEast (CEU) has announced another capital raising — looking to raise a minimum of $420m.
  • BlueScope Steel (BSL) has successfully raised $300m in an institutional placement.
  • CSL Ltd (CSL) has released its research and development briefing.
  • Industrea (IDL) has won a new contract to supply equipment to China worth $US5.3m.
  • Sino Gold Mining (SGX) expects to produce between 210,000 and 230,000 ounces of gold in 2009 from its two mines in China at a cash operating cost of less than $US400 per ounce.
  • Albidon (ALB) has provided a business update on its Munali Nickel project.
  • Seek (SEK) struggling with unemployment figures indicating the labour market will be depressed for some time.

Broker Stuff today…

  • Plenty of broker research out this morning on Commonwealth Bank (CBA) after its $750m capital raising. UBS Warburg maintained their Neutral recommendation and 3500c target price. GSJB Were say Sell and have a 3457c target price and JP Morgan are Neutral but cut their target price to 2739c from 3089c.
  • Rio Tinto (RIO) has been upgraded to Buy from Underperform by Merrill Lynch after yesterdays announcement. They also lifted their target price target price to 6000c from 5000c. Citi also maintained their Buy recommendation and 6900c target price.
  • Citi says Oz Minerals might have to raise money to get itself out its current debt position and initiate asset sales. Citi estimates Prominent Hill net present value at $1.56bn and Martabe at $231m, but says OZL unlikely to achieve these sales prices in current conditions.

Other stuff…

  • The US bond futures imply a 57% chance of a 75bp interest rate cut in the US next week taking interest rates from 1.0% to 25bp.
  • Job Numbers of the Day — the November jobs are out — Jobs fell 15,600 against forecasts for a fall of 15,000. The unemployment rate is up to 4.5% from 4.3%. The slightly less disappointing number than expected is perhaps due to the fact that it is a “historic” not a “leading” economic number. The trouble is ahead not behind. The A$ has rallied on the number suggesting there is less need for an interest rate cut because unemployment is not as bad as expected.
  • The Dow Futures suggest a 24 point fall on Wall Street tonight.

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