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Once again, local shares stumbled out of the gates to trade down 1.2% soon after the open. Resources continued to drag as China’s efforts to slow lending fuelled uncertainty and pressured commodity prices.

A late sell-off on Wall Street erased early gains, adding to anxiety in domestic markets.

Investors are looking to December quarter CPI data, due out at 1130 AEDT. With the RBA undoubtedly embarked on a tightening cycle, investors will be looking to the data to help determine whether the monetary authority will pause or continue raising rates at its February Meeting next week.

Among the major miners, Rio fell 3.4%, BHP was down 1.6% and Fortescue lost 3.5%. Together, the companies accounted for around 15 points out the All Ord’s 57-point decline.

Financial were also trading lower with the big four banks down between 0.8% and 1.7%.

Elsewhere, Woolworths lost 2.3% despite reporting a 6% increase in sales for the half year to December 2009.

CBH Resources Limited (CBH) said lead and zinc production at its Endeavor mine were 8% and 13% above forecast respectively for the December quarter. The company also said mill throughput and mining head grades were 10% and 3% above forecast in the same period.

CBH said activities associated with Endeavor production ramp up to 850,000 tonnes per year are ahead of schedule, while second quarter operating cashflow was $2.8 million on a notional basis and $6.6 million for the half.

The company said average C1 cash costs were up on the first quarter at US78.3c, reflecting increased mining activities for the ramp up required to double production at Endeavor from July 2010. For the December half it averaged US65.9c per pound zinc equivalent.

CBH said its cash balance of $47.2 million at 31 December 2009 was an increase of $2.3 million at 30 September 2009.

The company said a scoping study has confirmed the viability of the Panorama project as a high grade underground mine with an anticipated life of nine years and a global search for a partner to develop the mine has commenced.

Applications for recommencing mining at the Rasp Mine were lodged with the New South Wales State Government and Broken Hill City Council during the December quarter, CBH said.

Looking ahead, the company said it is now benefiting from increased metal prices and reduced costs, with operations at Endeavor remaining cash positive for the first half of the current financial year.

”The expansion of Endeavor mine to 850,000 tonnes per annum is on track to commence in mid 2010, and mining of high grade remnant ore at Rasp Mine is expected to commence at about the same time,” CBH said.

”The increased production from Endeavor combined with new production from Rasp will generate a significant increase in revenue for the company, particularly in light of the recent increases in metal prices.”

As at 1043 AEDT, CBH shares were down 1c to 15c.

Woolworths Limited (WOW) had more than $1 billion a week go through its tills, racking up $27.2 billion in sales for the 27 weeks to 3 January, 6% higher, excluding petrol, than the previous corresponding period. The retailer was upbeat about the remainder of the financial year, with sales expected to grow in the upper single digit range and EBIT rising even faster.

”We also expect net profit after tax for FY10 will grow in the range of 8% to 11%,” the company said.

Woolworths said the result for the full year would be affected low inflation and the effect of macro-economic factors like interest rates and consumer confidence.

Turning to the current results, including petrol, Woolworths said sales had increased 4.2%, reflecting a 9.5% decline in petrol receipts to $2.8 billion and lower prices at the bowser.

CEO and managing director, Michael Luscombe said the government’s stimulus package played a role in the result.

“Our Supermarkets achieved solid volume and market share growth whilst experiencing lower levels of inflation in Australia and New Zealand, and the cycling of the anniversary of the Australian Government stimulus payments,” Mr Luscombe said.

“Due to our customer focus, we were very well positioned and therefore received a clear benefit from the stimulus package in the prior financial year.”

Food and liquor sales for the company rose 6.8% to $18.1 billion. The result was impacted by low inflation in the December quarter.

”Inflation during December was 0.4% this year compared to 5.3% in December last year,” the company said.

Across the company’s portfolio, Big W sales rose 2.3% in the half.

Consumer electronics sales grew 5.9% over the half, although just 0.2% in the December quarter.

Dick Smith stores outperformed Tandy and Powerhouse stores, with sales rising 12.2% for the quarter.

At 1028 AEDT Woolworths shares were down 64c to $26.84.

Super Cheap Auto Group Limited (SUL) forecast group EBITDA would be in the vicinity of 20% higher for the 26 weeks to 26 December 2009, when compared to the previous corresponding period. The company said the positive sales performance at Supercheap Auto and BCF Boating Camping Fishing has been augmented by improvements in gross margin and a reduction in operating costs as a percent of sales.

Despite the improved performance, the company said sales and gross margin performance at Goldcross Cycles was lower than expected and would likely result in an EBITDA loss of around $3.5 million.

Managing director, Peter Birtles, chose to focus on the positives, saying that the overall group results were pleasing.

“The momentum that we have established over the last three financial years has been maintained and, although we expect that the rate of sales growth will slow in the second half of the year, we anticipate that we will deliver solid like for like sales growth and continue to improve EBIT margins,” Mr Birtles said.

“We remain confident that we can establish a profitable Goldcross Cycles business and are in the process of finalising a revised business plan.”

Mr Birtles added that the company's store opening program is ahead of plan this year and expects to open a further two Supercheap Auto stores and four BCF Boating Camping Fishing stores in the second half of the year.

At the open Wednesday, Super Cheap Auto shares were steady at $5.45.

Auckland International Airport Limited (AIA) announced its intention to raise NZ$126.4 million through a fully underwritten pro rata entitlement offer. The company said shareholders would be entitled to subscribe for 1 new share for every 16 shares held at NZ$1.65 each.

AIA said it would use proceeds of the offer to repay a portion of the debt drawn down to pay for the recent acquisition 24.55% of Cairns and Mackay airports for A$132.8 million.

Meanwhile, the company released unaudited management results for the six months ended 31 December 2009.

AIA said total passenger volumes rose 2.3%  compared to the previous corresponding period. The company said the rise was driven by increases on trans-Tasman routes and growth in domestic travel passenger numbers due to strong competition.

AIA said total aircraft movements were down 2.9% in the same period, which reflected the decreased frequency of aircraft movements on domestic routes offset by increased frequency of aircraft movements on international routes.

Revenue was down 0.6% to NZ$182.9 million for the six-month period, while operating EBITDA was in line with the previous year at NZ$138.8 million.  

AIA shares were halted at $1.465.

CSR Limited (CSR) confirmed that it had spoken to Chinese food company Bright Food Group last week, however it had only received confirmation of its previous expression of interest. CSR, however, challenged the company to increase its offer for the Australian company, saying that at this stage it was proceeding with its proposed demerger of its sugar and renewable energy business.

The CSR board said that it was “only willing to progress any transactions alternative to the demerger if such transactions have a sufficiently high degree of certainty as to value, timing and likelihood of completion.”

CSR said that Bright Food was becoming aware of the real value of the business, however had not made a superior offer to its demerger proposal, despite having the necessary information available.

”Therefore, CSR remains committed to progressing the demerger proposal and has today reconfirmed that commitment to Bright Food,” the company said. 

At the close Monday, CSR shares were $1.915.

Gloucester Coal Limited (GCL) said total sales were down 9% despite a 73% increase in coking coal sales in the quarter to December 2009. The company said this reflected a decision to focus on the coking coal market.

GCL said total sales for the quarter was 444kt of which coking coal contributed 146kt.

“The company focused on coking coal sales in a strengthening market,” GCL said.

“Gloucester has been able to adjust its mining and sales mix to take advantage of the strengthening coking coal market and maximise overall sales volume within the allocation constraints provided by the Port of Newcastle Capacity Balancing System.”

The company said the outlook for the coking coal market remained strong with spot hard coking coal sale prices being reported at substantially higher prices than those seen in the 2009/10 Japanese Financial Year

GCL noted that this was driven by strong demand and tight supply.

“We believe this outlook augers well for the company to achieve substantial price increases for the 2010/11 Japanese Fiscal Year,” GCL said.

The company said its focus remained on supplying the Japanese steel mills, however management is also seeking to place coal into alternative markets to maximise returns on its coking coal volumes increase with the planned Duralie extension in late 2010.

Meanwhile, quarterly sales of Gloucester thermal coal of 295kt, representing a reduction of 26% compared to the previous corresponding period, was as a result of a focus on coking coal deliveries.

The company said total product for the quarter ended December 2009 was 491kt, up 13% compared to the previous corresponding period. This was off a 17% increase in total ROM coal delivered to its processing plant.

On Monday, Gloucester Coal shares were up 4c to $8.41.

Arrow Energy Limited (AOE) announced a 50.3% upgrade to proven and probable (2P) reserves. The company added that proven, probable and possible (3P) reserves were up 18.6%.

The company said that 2P reserves now totalled 6,150 PJ, while gross 3P reserves were up to 11,042 PJ.

“The company has added 3,458 gross 2P reserves in 12 months which substantially exceeded our target to add at least 1,000 PJ of gross 2P in 2009,” AOE said.

The company noted that after adjusting for the recent Shell pre-empt on Tipton West 2P reserves net to Arrow have increased 53.4% to 3,690 PJ and net 3P reserves have risen 13.8% to 5,781 PJ.

This increase in 2P reserves followed a similarly large 2P reserves increase in June 2009.

The company said this demonstrated its ability to convert the estimated gross gas resource of 74,000 PJ that exists on its Australian tenements to commercial reserves.

“[This] was a direct result of the $300m exploration and appraisal program, the maturation of our gas fields and our technical and reservoir knowledge,” AOE said.

Looking ahead, the company said exploration and appraisal activity over the next twelve months would focus on expanding its 3P footprint through further conversion of our contingent resource, with 3,000 PJ of gross 3P expected to be added in 2010 and gross 2P reserves additions expected to be 1,500 PJ.

On Monday, Arrow Energy shares slid 5c to $4.07. 

Breville Group Limited (BRG) said underlying EBITDA for the six months to 31 December 2009 was expected to be around $30 million, ahead of previous guidance. The upbeat forecast comes on the same day that GUD formerly let its bid for the company lapse following the ACCC's rejection of the deal.

Looking ahead the appliance manufacturer said it now expected to deliver full year underlying EBITDA for FY10 in the range of $43 million to $46 million, up from $33.6 million for FY09. The company had previously offered full year EBITDA guidance of around $38.7 million.

CEO, Stephen Audsley, said the result was largely due to a stronger than expected performance in North America and Australia.

“Our performance in November and particularly December was well ahead of expectations, and affirms our strategy of focusing on innovative products and leveraging those products across multiple geographies,” Mr Audsley said.

”Breville’s performance in North America was especially pleasing, with a substantial improvement in what remains a challenging retail environment.”

Breville said it continued to be constrained by an onerous lease obligation, which would cost the company $3 million in EBITDA this year.

The company said the stronger sales had improved the cash flow and reduced debt levels more than anticipated.

At the close Monday, Breville shares were trading at $1.68 each.

Wall Street erased early gains Tuesday to eventually close slightly lower. The early rally was sparked by upbeat earnings reports from several companies including Apple and Travelers.

The Federal Reserve starts its two-day policy meeting with the decision to made on whether or not chairman Ben Bernanke's term will be renewed. Interest rates are expected remain at historic lows.

In economic news, the Consumer Confidence index increased from 53.6 in the previous month to a better than anticipated 55.9 in January. Forecasts were for the Conference Board’s index to decrease to 53.5.

Meanwhile, the S&P/Case-Shiller 20-city home price index slid a larger than expected 0.2% in November from October and was down 5.3% from a year ago.

The Dow Jones lost 2.57 points, or 0.03%, to 10,194.29, the S&P's 500 shed 4.61 points, or 0.42%, to 1,092.17 and the NASDAQ dipped 7.07 points, or 0.32%, to 2,203.73.

Financials led the slide. Wells Fargo, Citigroup and Goldman Sachs lost between 2.4% and 2.7%.

Travelers gained 2.7% after the property-casualty insurer beat quarterly earnings and revenue estimates.

Apple put on 1.4% after beating quarterly earnings and revenue estimates in its report released after the close Monday. The better than expected result was attributed to strong sales of iPhones and Macintosh computers.

The tech sector was mixed, with Microsoft up 0.6% and IBM down 0.3%.

Search engine Yahoo! added 0.8% ahead of the release of its fourth quarter earnings after the bell. The company reversed last year’s loss to report a profit and beat revenue estimates.

DuPont dipped 0.8% despite the chemical maker topping quarterly estimates and increasing its full-year earnings forecast.

Johnson & Johnson slid 0.7% after the company forecast full-year profit at the lower end of estimates. 

Discretionary stocks were boosted by the consumer confidence data. Retailers Wal-Mart and Target rose 1.4% and 2.5%, while automaker Ford gained 1.5%.

COMEX gold for February delivery rose US$2.60 to settle at US$1,098.30 an ounce.

NYMEX light crude oil for February delivery fell US55c to settle at US$74.71 a barrel.

European Markets

European stocks closed higher for the first time in five sessions on the back of positive consumer sentiment data out of the US and better than expected German business confidence. Pharmaceuticals led gains, while miners dragged.

The UK benchmark FTSE 100 added 16.54, or 0.31% to 5,276.85, while French CAC40 gained 25.19, or 0.67% to 3,807.04. The German DAX rose 37.56, or 0.67% to 5,668.93.

Financials were mainly lower. In the UK Royal Bank of Scotland and Lloyds fell 1.6% and 2.3%.

Deutsche Bank slid 1.1%, while France’s BNP Paribas and Societe Generale advanced 2.1% and 1.1%.

H1N1 swine flu vaccine sales helped Novartis’s fourth-quarter profits increase 54%. The company’s shares put on 2.1%, while AstraZeneca, GlaxoSmithKline and Sanofi-Aventis added between 1.4% and 1.5%.

Siemens climbed 5.1% after cost cuts and a strong performance from its energy and healthcare businesses resulted in the engineering company reporting its highest quarterly profit in more than two years.

Semiconductor companies Infineon and STMicroelectronics gained 2% each after Texas Instruments forecast a continuation of strong sales seen in the last quarter.

Concerns about the Chinese economy and a fall in metals prices sent miners lower. Xstrata fell 1.7%, while Aussie peers BHP Billiton and Rio Tinto lost 1% and 1.1% respectively.

BG Group, which was up 1.5%, was the best performer on a positive day for energy majors. 

Japanese Markets

Japan’s Nikkei slumped to its lowest close in five weeks as China continued to implement measures to slow its economic growth. As a result the yen rose, sending export stocks lower.

The Nikkei 225 dropped 187.41, or 1.78% to 10,325.28.

Hitachi Construction Machinery Co. sank 4.2% following a broker recommendation to sell the stock, citing a slowdown in construction activity in China. Komatsu lost 2.5%

Electronics makers Sony and Panasonic weakened 4.8% and 5.3%.

Heavyweight banks Mitsubishi UFJ Financial and Mizuho Financial Group lost 3.1% and 2.7%.

Shipping stocks struggled on concerns demand will diminish. Kawasaki Kisen Kaisha and Nippon Yusen K.K. fell 4.6% and 3.6%.

Sumitomo Metal Mining shed 3.5% on the back of a drop in commodity prices, while trading house Mitsui & Co dipped 2.6% due to commodities being its largest source of profit.

Mobile phone operator KDDI slumped 8.6% after agreeing to buy a 38% stake in Jupiter Telecommunications for US$4 billion. Jupiter shares fell 6% after a 14% jump the previous day.

Hong Kong Markets

The Hang Seng slumped again Tuesday, closing at their lowest level in four months. The market retreated on the back of weaker than expected earnings for key players on the market and the continuing shadow China’s lending restrictions has placed on the growth expectations.

The Hang Seng slumped 489.22, or 2.38% to 20,109.33.

Bank of China and heavyweight lender ICBC were both down 3.4%.

HSBC lost a more modest 0.2%.

Foxconn International, the world’s largest third party mobile phone maker, lost 8.7% after issuing a profit warning.

Li & Fung, which makes clothes for Wal-Mart and Australia’ bonds tacked on 0.2%.

Shoemaker Yue Yuen Holdings bucked the trend, rallying 3%.

The move triggered a broader sell-off, particularly in consumer electronic stocks.

China Oil & Gas Group slumped 19% after announcing a $100 million capital raising.

Resource stocks were mostly heavily sold as the price of commodities retreated and China’s restrictions on lending threatened growth.

Jiangxi Copper lost 7%, while offshore oil producer CNOOC lost 3.5%.