Australian Market Report of January 22: Helped by Short Selling Ban

Sydney, Jan 22, 2009 AEST (ABN Newswire) - Wall Street closed higher overnight as strong earnings from IBM and others helped to restore some market confidence.

Yesterday the Australian stock market ended the day lower, led by financial stocks, on renewed worries about banking industry worldwide. The benchmark S&P/ASX200 index was down 1%, or 33.8 points, at 3442.8, while the broader All Ordinaries index was lower by 0.9%, or 30.2 points, at 3394.8. Regulator ASIC's move to extend a ban on covered short-selling of financial securities would give a positive lead to the banking industry.

At 0808 AEDT on the Sydney Futures Exchange, the March SPI futures index was 46 points higher at 3,474.

The Australian dollar opened marginally firmer as goodwill towards the new Obama Administration in the US gave a nudge to high-yielding currencies. At 0700 AEDT, the Australian dollar was trading at 65.58/61 US cents, up from Wednesday's close of 65.52/55.

Crude oil rose the most in two weeks, following equities higher, on speculation a bank-rescue plan from President Barack Obama will boost financial companies. Light, sweet crude for March delivery settled $US2.71, or 6.6 per cent, higher at $US43.55 a barrel on the New York Mercantile Exchange.
Key Economic Facts and Figures

THE Australian government is considering emergency measure to help Australian businesses by a multi-billion-dollar scheme partly funded through the sale of commonwealth bonds. The Government is finalising the plan, and the banks have been negotiating the details with David Murray, head of the Future Fund and former head of the Commonwealth Bank, who is assisting the Government on the issue.

Last night, the corporate regulator, the Australian Securities & Investments Commission, extended by six weeks a ban on short-selling bank stocks after watching unprecedented dumping of British and American bank shares in the past week.

An Australian Industry Group/Deloitte survey of chief executives yesterday showed companies are bracing for big jobs cuts as local and offshore demand fades. The report forecast the manufacturing industry will cut 44,000 jobs this year, with 55,000 construction sector jobs likely to go, and about 40,000 service sector jobs to disappear.

Today the Melbourne Institute releases its Survey of Consumer Inflationary Expectations. Westpac/Melbourne Institute Survey of Consumer Unemployment Expectations for January is also due.

M&A News

CBH Resources(ASX:CBH) has dropped its hostile takeover bid for lead and zinc miner Perilya(ASX:PEM) after the Takeovers Panel refused the company's application to consider forcing Perilya to delay a shareholders meeting next month which would consider a placement of shares to China's third biggest zinc producer, Shenzhen Zhongjin Lingnan Nonfemet(SHE:000060).

Coal seam gas producer Arrow Energy(ASX:AOE) says it will have almost a controlling interest in Pure Energy Resources(ASX:PES) when the target's major shareholders accept its A$673 million cash-and-scrip deal as promised.

Important Corporate News

Newcrest Mining(ASX:NCM) said its gold output fell 16.2% to 382,584 ounces during the second quarter ended on December 31 and cut full-year production forecasts for its Telfer mine.

Wesfarmers(ASX:WES) has confirmed its directors met yesterday "to consider a range of options in terms on refinancing". The company is expected to unveil a capital raising of about A$3 billion as early as today.

Telstra's(ASX:TLS) Chief Operating Officer, Greg Winn, will leave the company to pursue "personal interests". Telstra chief Executive Officer Sol Trujillo said the company would not replace Mr Winn.

BHP Billiton(ASX:BHP) said it would cut 7 per cent of its entire workforce, roughly 6000 jobs. More than 3400 of those will be from its Australian operations in Queensland and Western Australia.

Woodside Petroleum(ASX:WPL) has forecast profit of up to $1.8 billion for the full year and delivered a rise in output for the quarter. The oil and gas producer said preliminary analysis had indicated that net profit for the 2008 calendar year could be in the range of A$1.75 billion and $A1.8 billion, about 70 to 75 per cent higher than the previous year.

International Company News

Zenotech Laboratories Ltd. (BOM:532039), an affiliate of Ranbaxy Laboratories Ltd. (BOM:500359), said it had enclosed a set of e-mails to remind Daiichi Sankyo(TYO:4568) about the pricing and timing of the open offer to Zenotech shareholders.

Contact

Michelle Liang Asia Business News Asia Bureau Tel: +61-2-9247-4344 Email: michelle.liang@abnnewswire.net