Sydney, Dec 10, 2008 AEST (ABN Newswire) - Wall Street tumbled overnight, ending the two days rally, with more corporate profit warnings, job cuts and a sell-off in the financial sector. Investors also worried the bailout of the US carmakers may cost more than expected.

Yesterday Australian market closed lowered as banks stocks plunged after Westpac(ASX:WBC) announced its A$2.5 billion capital raising. The benchmark S&P/ASX200 index had lost 27.3 points or 0.75 per cent to 3604.3, while the broader All Ordinaries was down 20.1 points or 0.57 per cent at 3533.7. Analysts expect more companies such as Commonwealth Bank(ASX:CBA) may also have to raise capital.

The Australian dollar opened firmer as gains on European equity markets outweighed a weaker Wall Street to lift the appeal of the risk-sensitive currency. At 0700 AEDT, the Australian dollar was trading at $US0.6586/94, up from Tuesday's close of $US0.6558/61.

Oil prices fell on Tuesday on profit-taking after jumping the previous day on hopes that a US economic stimulus plan and auto sector bailout would boost energy demand in the United States, traders said. Light sweet crude for January retreated 64 cents to $US43.07 on the New York Mercantile Exchange.

Key Economic Facts and Figures

Reserve Bank of Australia Governor Glenn Stevens has not ruled out cutting interest rates in January if circumstances worsen. Reserve Bank governor Glenn Stevens last night warned China's economy was slowing much faster than expected, which could hurt Australia market, especially the mining sector. NAB chief economist Alan Oster expects the gloomy global outlook will force the RBA to slash official interest rates by 0.75 per cent in February and a further 0.5 per cent in March. JPMorgan chief economist Stephen Walters said the RBA Governor's latest comments left open the possibility of a rate cut announcement on January 6.

The latest NAB business survey for November found business confidence at its lowest ever level, below that recorded during the 1990-91 recession. NAB now believes the economy will grow just 0.5 per cent in 2009, with the non-farm parts of the economy likely to fall into recession.

In economic news, the Australian Bureau of Statistics releases its housing finance data for October. Westpac and the Melbourne Institute release their consumer sentiment index for December.

M&A News

Fairfax Media(ASX:FXJ) remains in talks about the sale of its Southern Star TV production business, downplaying a report it had sold the asset for A$162 million. But Fairfax says no agreement has been concluded.

Lachlan Murdoch's investment company Antium Pty Ltd has bought a 13.59 per cent stake in toy wholesaler Funtastic Ltd(ASX:FUN). Antium acquired 22.48 million shares in the company last Friday, a notice filed with the Australian Securities Exchange late on Tuesday shows.

Important Corporate News

Virgin Blue(ASX:VBA) has indicated it will cut at least 275 jobs if "times get tougher". The airline has already declared it will scale back flight numbers and cancel routes to combat the economic slowdown as it attempts to at best break even this financial year.

Macquarie Group(ASX:MQG) revealed yesterday that it believed the profit contribution of its major areas, particularly the investment banking division of Macquarie Capital, would be well down on earlier projections.
Mineral sands miner Iluka Resources(ASX:ILU) has upgraded its net profit forecast for calendar 2008. The company's full-year earnings are expected to be about A$60 million, compared with its previous estimate of around A$50 million.

Gunns(ASX:GNS) said yesterday that it expects its operating pre-tax profit for the first half of 2008-09 higher than the result for the previous corresponding period. The company said the current forecast of operating profit from trading operations is an increase on the prior year but not greater than 15 per cent.

1. Related Stocks - Mid Market (AEST 1230)
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Code   % Change   Volume     Turnover  Low   High
-------------------------------------------------
ASX:MQG  +.69   496,862    $16,174,091  2956 3066
ASX:ILU  +1.7   2,122,900  $10,131,173  466  489
ASX:FXJ  -.66   3,105,570  $4,569,823   142  152
ASX:VBA  -1.69  2,164,181  $629,602     28.5 29.5
ASX:GNS  -4.76  551,566    $567,224     97   106
ASX:FUN  +42.85 809,239    $163,345     18   22
2. Top 10 ASX on Turnover - Mid Market (AEST 1230)
-------------------------------------------------
Code   % Change   Volume     Turnover  Low   High
-------------------------------------------------
ASX:WBC  -8.94  19,440,594 $318,003,875 1610 1654
ASX:BHP  +3.3   9,669,660  $284,194,821 2880 2975
ASX:CBA  -2.76  5,082,844  $153,936,925 2873 2950
ASX:RIO  +2.51  1,817,638  $69,151,272  3355 3466
ASX:NAB  +.35   3,382,846  $68,084,107  1964 2014
ASX:ANZ  +.7    4,348,573  $63,535,862  1390 1439
ASX:TLS  +1.18  12,751,695 $54,046,166  416  428
ASX:QBE  -.6    1,556,026  $38,870,657  2473 2510
ASX:WOW  +.82   1,384,016  $37,101,191  2634 2710
ASX:WDC  +4.6   2,453,653  $32,875,464  1301 1369

Contact

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


Related Companies

Westpac Banking Corp        
Virgin Blue Holdings Limited        
Macquarie Group Limited        
Iluka Resources Limited         
Gunns Limited        
Funtastic Limited        
Fairfax Media Limited         
Commonwealth Bank of Australia        

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