The market is up 21 — drifted back from a high of 77 early on. The SFE Futures were predicting a rise of 74 this morning. Resources underperforming — down 0.4% at 11:30am — RIO tanking — down another 10.3% on the back of capital raising concerns to pay down debt and press about writing-off $10.5bn on Alcan assets. BHP up 1.6%. Banks up 2-3% early on but drifting back — NAB outperforming, up 3.6%.

The Dow was up 172. Up 205 at best. Down 185 at worst. Some good news on mortgage rate applications and some improvement in lending, boosts financials — up 5.6%. Strong e-commerce results over the 4-day shopping frenzy boosts retailers — up 6.3%. Nov ISM Services index down to the lowest level since 1997. ADP Nov Employment down 250,000 — worse than expected. Beige Book alluded to a deeper recession. 3 stocks up for every two down. Volumes light. Commodities all down. BHP up 1.48% in ADR form overnight, RIO down 13.8%. Metals all down. Oil price down 26c to $46.79 despite a government report showing an unexpected decline in U.S. crude inventories. Gold down $12.80 to $770.50. Bonds up with the 10 year yield down to 2.65%. A$ up 0.65% against the US dollar.

The big story today is Babcock & Brown have reached agreement with their banks. They have secured a $150 lifeline at a rate of 6% above 30 Day BBSY rate with the facility due for repayment on December 31st 2009 and interest under this facility and existing facilities to be “immediately converted to a “Pay if you can” basis” (!?) There are conditions to the facility including the overseeing of a business plan by the syndicate with the plan to be in place by January 9th and it is to include new covenants with the syndicate. Then they have to do a capital restructure plan by 28th February.

Making the news today…

  • Rio Tinto (RIO) is having another shocker — Deutsche Bank say debt refinancing is the key risk to RIO’s credit, with surrounding uncertainty adding pressure to its Credit Default Swaps.
  • Billabong International (BBG) struggling after announcing an earnings downgrade due to weaker conditions in the US. It now expects EPS growth of 6%-10% for FY09, down from the 12%-16% estimate provided just over a month ago.
  • Dexus Property (DXS) has raised around $300m through an institutional placement at an issue price of 77c.
  • Nufarm (NUF) said business this fiscal year is tracking ahead of internal forecasts. It has reaffirmed outlook and has eased debt concerns.
  • PanAust (PNA) will sell copper concentrate from its mine in Laos containing over 27,000 tonnes of copper and nearly 30,000 ounces of gold at spot market prices.
  • Moody’s says QBE Insurance’s (QBE) rating won’t be affected by its offer to offer exchange perpetual preferred securities for senior securities at a discounted rate.
  • Roc Oil (ROC) said that new drilling has resulted in production at its Chinese oil subsidiary soaring in the 2H of November.
  • Straits Resources (SRL) said it would review its 47.1% stake in Straits Asia Resources – worth $323m – at current market capitalization, after receiving “a number of unsolicited expressions of interest.”
  • GRD Ltd (GRD) has agreed to sell its Eastern Creek Facility.
  • Talk of Fairfax Media (FXJ) holding another special board meeting today.

Broker Stuff today…

  • GSJB Were maintain their BUY recommendation on The Reject Shop (TRS) and 1400c target price (50.6% above the current share price) after its competitor Australian Discount Retail released its FY08 result. According GSJB Were’s, TRS is currently trading at a 19% premium to the Small Industrials Index”.
  • Lots of broker stuff on Perpetual (PPT) this morning after they held their strategy briefing and provided guidance yesterday. Most brokers have a Neutral recommendation and cut their target price estimates, except for ABN AMRO who upped it to 3130c from 3070c.
  • GSJB Were cut their recommendation on Boart Longyear (BLY) to HOLD from BUY and maintain their 47c target price (128.6% above the current share price) after its held an investor update and cut its 2008 EBITDA guidance.

Other news today…

  • The RBNZ have cut interest rates by 1.5% to 5.0%. The Bank of Thailand have cut rates by 100bp to 2.75% (biggest cut in 8 years). The European Central Bank are expected to cut rates tonight by 50-75bp.
  • Building approvals have continued their downtrend — falling 3.8% in October with the value of total buildings approved falling 4.9%.
  • The October Trade Surplus was the largest on record — $2.96bn up from $1.25bn in September — economists expected $1.46bn.
  • The growth in gambling expenditure was +1.1% in November, the slowest growth in 7 years.
  • The Dow Futures suggest a 22 point fall on Wall Street tonight.

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