egolinews.com

Charter Hall Group (CHC) sold its 50% stake in 275 George Street in Brisbane to K-REIT Asia (Australia) Trust, for $166 million. CPOF will retain the remaining 50% stake in the office development. The group said co-developer Charter Hall Core Plus Office Fund would retain the remaining 50% stake in the office development alongside Singapore based real estate investment trust K-REIT Asia. Charter Hall said it would continue to undertake the management of the property.

Greenspark Power Holdings Limited increased its offer for all of Energy Development Limited’s (ENE) shares from $2.75 to $2.76 per share. The offer is subject to Greenspark acquiring a relevant interest in more than 90% of ENE’s share capital by the end of the offer period. Already with a 67.15% interest in ENE, Greenspark said the offer price is final. The offer if scheduled to close on 5 February 2010.

VDM Group Limited (VMG) announced the appointment of Ken Perry as its new CEO, The company said the former managing director of Brandrill would join VDM Group effective from today. VDM said Mr Perry would take over from acting CEO Jim Van Der Meer who will retain his position of executive director on the VDM board. In the last month the company said it has announced contract wins approaching $100 million in value and its order book at 31 December 2009 stood at $415 million. Meanwhile, Michael Perrot has been appointed deputy chairman.

Stockbrokers and market commentators elsewhere have done their best in convincing their clientele and readers that weakness experienced in prices for equities and commodities over the week past is nothing but a buying opportunity. I dare to differ. I believe what we are witnessing throughout the month of January marks a thorough and fundamental change in the underlying trend for risk assets.

While this implies that the strong uptrend in place since the first quarter of 2009 has now -abruptly- come to an end, I do not side with the army of doom and gloom preachers suggesting prices for oil and copper, as well as major equity indices are now irrevocably on their way back to pre-March-rally lows. But investors should take today's message seriously nevertheless: the trend of ongoing monthly gains for risk assets is no longer in place.

As such, calendar 2010 will bring something to the mix investors have not experienced since March last year (ten months ago, January not included): share markets will experience months during which losses will be booked on a net basis. It may well be that January, the first month of the new year, will be the first to mark this reversal in trend.

Readers who have been reading my stories and analyses this month already know I have been warning repeatedly of this reversal as valuations overall were looking rather full for market leaders in the US and Australia. On top of this, I was convinced that junior traders and hedge funds had used the quiet period between Christmas and the second week of January to push up prices for equities and commodities too far.

To put it simply: oil does not yet deserve to be trading at US$84/bbl, copper should be nowhere near US$8000/tonne and Australia's leading indices reaching out for 5000 in early January seems a bit (too) rich too.

The irony of all this is, of course, that global economies today seem in a much better place compared with last year, while US companies are finally making advances in profits again (after nine consecutive quarters of declining profits). The key phrase behind today's asset prices, however, is not necessarily "economic recovery", but rather "abundant liquidity".

Those who say that January's price weakness is but a buying opportunity focus on the first phrase. I however say: be careful, because it is the second factor that can bring potentially very damaging side-effects to this year's mix of events. At a time of elevated asset prices, all markets needed was a trigger to reverse course.

It would seem this trigger came at least in threefold: problems in Greece that in effect prove the GFC is not history just yet, tightening measures in China, and a struggling US president who declared war on greedy bankers and speculators to help turn around the political tide and his sinking approval ratings.

The Big Question that is poised to come to the fore this year is whether last year's easy speculation in risk assets will turn out to be a major negative in 2010. As far as market positioning goes: too many investors, big and small, have their portfolios weighted too much in favour of cyclical leverage, in effect going short US dollar and Japanese Yen and long (nearly) everything else from oil to copper, to gold, to the Australian and Canadian dollars, to Emerging Markets and equities on Wall Street.

Secondly, too much liquidity, in China and elsewhere, has found its way in commodity markets where a big chunk of last year's "apparent demand" has ended up in stockpiles of which nobody knows what, where and how much has been stockpiled along the way. Today's prime example of this is crude oil. The world's producers are currently producing more than what is being consumed, resulting in stockbrokers and financiers renting large ships to store oil in order to benefit from price rises later.

Under normal circumstances this would be enough for investors to push oil prices down, but in today's context wherein everybody is convinced crude oil prices will return to US$100/bbl and higher in calendar 2011 (at the latest), investors simply cannot help themselves other than to seek exposure to the simply-cannot-fail future upside of crude oil prices.

The problem is that so many investors all seek the same exposure at the same time. Sounds familiar? Think gold in October last year. Or oil in the second quarter of 2008.

This was once again demonstrated by UBS's measurement of global risk appetite. The index jumped into "extreme" territory in December last year and simply refused to come down, indicating markets overall were once again running hot on too much optimism and adrenalin. Over the past week this index has dived lower, but it still remains in positive territory.

What has caught my attention over the past ten days or so (apart from stockbrokers telling their clients this is an opportunity to buy) is that financial markets across the globe have started to break through well-established trend lines that find their origin in the first quarter of 2009. I can only describe this as a major development. It should instantly attract every investor's full attention.

For someone who doesn't see himself as a technical analyst (and I am not) I have spent an inordinate amount of time these past days, staring at one year price charts for all sorts of assets, markets, indices and share prices. The reason I did this was because I had observed that global share markets had started to break below these trend lines. As weakness has persisted, commodity indices such as the Reuters Jefferies CRB Index have now also broken below their year-long support line.

At the very least this indicates that the trend in place since March 2009 has now ended. Full stop.

Here's an example of what I am talking about:

What are the possible implications? Under the most positive scenario this break in trend could prove temporarily only. As an example, in late 2003 (late stages of the 2000-2003 bear market) the Australian share market equally broke through its longer term trend line, after which the market broadly traded sideways for a while, albeit with a slight positive bias. One year later a new bull market was born and the share market never looked back, until late 2007.

A more common scenario, but not necessarily a blue print for the future, is the one provided by the EUR/USD. The cross broke through its trend line in early December last year and it has simply moved into the opposite direction ever since. If one ever wants to see a decisive change in trend, EUR/USD is one to look at today.

An interesting alternative is provided by WorleyParsons ((WOR)). When looking at its price chart, one can see how investors for an extended time simply refused to accept that the underlying trend for the shares had changed, resulting in the shares oscillating around the rising trend line. This is similar to what happened with the EUR/USD in 2008. As one can see from the chart below, ultimately, however, this always ends with a much steeper decline. This was also the case for EUR/USD in 2008.

Conclusion: a major trend has been broken in a decisive manner. We will have to find out what exactly will be the new trend, but we know the old one is no longer in place.

Are shares and commodities now being transformed into a buying opportunity? That depends on one's horizon and goals, but I am pretty certain it won't be the case for all shares and not for all commodities either.

One observation I have made is that many leading large caps in Australia have not yet broken through their trend lines. BHP Billiton ((BHP)), for instance, is still priced above $40 and Commbank ((CBA)) remains above $52. Some stocks, such as Leighton Holdings ((LEI)) and Qantas ((QAN)) could potentially experience a lot of weakness and still remain on the positive side of their trend lines.

For others, such as WorleyParsons (see above) and Boral ((BLD)) the reversal in trend has already occurred.

Special note for paying subscribers: I will follow up on this story with many more charts and graphs, if not on Thursday, then on Friday. Check the website if you haven't set any email alerts.

With these thoughts I leave you all this week,

Till next week!

Rudi Filapek-Vandyck

(as always firmly supported by the Ab Fab team at FNArena)

P.S. For the newcomers who have yet to catch up with my track record of the past few years: in June of 2007 I warned prices for uranium had peaked and weakness should be expected. At the time, spot uranium was at US$138/lb. Today it is at US$42.50/lb.

Later that year I stated analysts and economists worldwide were severely underestimating the true nature and impact of the subprime crisis in the US. From that moment on I declared all Australian banks should be regarded a Sell.

In late 2007 I concluded the market was looking expensive, though I did not foresee the savage downturn that was about to follow.

In the second quarter of 2008 I warned everyone that oil at such elevated prices would not be sustainable. Don't buy any oil stocks, I warned readers and subscribers at FNArena. Unfortunately, most would ignore my warning and go with the ruling market view.

In late August that year I predicted the most severe correction for commodities in human memory was about to unfold. Those readers and subscribers who acted on my warning still approach me and shake my hand whenever they see me at a conference or trade show.

In June last year I turned positive on global equities, Australian banks in particular. (I had predicted a rally for March, but had my doubts whether it would prove to be a lasting one).

Now it's January 2010 and once again I had to conclude that prices for commodities and share markets had run too high, too quickly. Today I conclude the firm trend in place since Q1 last year is now broken and no longer in existence.

Stockbrokers and market commentators elsewhere have done their best in convincing their clientele and readers that weakness experienced in prices for equities and commodities over the week past is nothing but a buying opportunity. I dare to differ. I believe what we are witnessing throughout the month of January marks a thorough and fundamental change in the underlying trend for risk assets.

While this implies that the strong uptrend in place since the first quarter of 2009 has now -abruptly- come to an end, I do not side with the army of doom and gloom preachers suggesting prices for oil and copper, as well as major equity indices are now irrevocably on their way back to pre-March-rally lows. But investors should take today's message seriously nevertheless: the trend of ongoing monthly gains for risk assets is no longer in place.

As such, calendar 2010 will bring something to the mix investors have not experienced since March last year (ten months ago, January not included): share markets will experience months during which losses will be booked on a net basis. It may well be that January, the first month of the new year, will be the first to mark this reversal in trend.

Readers who have been reading my stories and analyses this month already know I have been warning repeatedly of this reversal as valuations overall were looking rather full for market leaders in the US and Australia. On top of this, I was convinced that junior traders and hedge funds had used the quiet period between Christmas and the second week of January to push up prices for equities and commodities too far.

To put it simply: oil does not yet deserve to be trading at US$84/bbl, copper should be nowhere near US$8000/tonne and Australia's leading indices reaching out for 5000 in early January seems a bit (too) rich too.

The irony of all this is, of course, that global economies today seem in a much better place compared with last year, while US companies are finally making advances in profits again (after nine consecutive quarters of declining profits). The key phrase behind today's asset prices, however, is not necessarily "economic recovery", but rather "abundant liquidity".

Those who say that January's price weakness is but a buying opportunity focus on the first phrase. I however say: be careful, because it is the second factor that can bring potentially very damaging side-effects to this year's mix of events. At a time of elevated asset prices, all markets needed was a trigger to reverse course.

It would seem this trigger came at least in threefold: problems in Greece that in effect prove the GFC is not history just yet, tightening measures in China, and a struggling US president who declared war on greedy bankers and speculators to help turn around the political tide and his sinking approval ratings.

The Big Question that is poised to come to the fore this year is whether last year's easy speculation in risk assets will turn out to be a major negative in 2010. As far as market positioning goes: too many investors, big and small, have their portfolios weighted too much in favour of cyclical leverage, in effect going short US dollar and Japanese Yen and long (nearly) everything else from oil to copper, to gold, to the Australian and Canadian dollars, to Emerging Markets and equities on Wall Street.

Secondly, too much liquidity, in China and elsewhere, has found its way in commodity markets where a big chunk of last year's "apparent demand" has ended up in stockpiles of which nobody knows what, where and how much has been stockpiled along the way. Today's prime example of this is crude oil. The world's producers are currently producing more than what is being consumed, resulting in stockbrokers and financiers renting large ships to store oil in order to benefit from price rises later.

Under normal circumstances this would be enough for investors to push oil prices down, but in today's context wherein everybody is convinced crude oil prices will return to US$100/bbl and higher in calendar 2011 (at the latest), investors simply cannot help themselves other than to seek exposure to the simply-cannot-fail future upside of crude oil prices.

The problem is that so many investors all seek the same exposure at the same time. Sounds familiar? Think gold in October last year. Or oil in the second quarter of 2008.

This was once again demonstrated by UBS's measurement of global risk appetite. The index jumped into "extreme" territory in December last year and simply refused to come down, indicating markets overall were once again running hot on too much optimism and adrenalin. Over the past week this index has dived lower, but it still remains in positive territory.

What has caught my attention over the past ten days or so (apart from stockbrokers telling their clients this is an opportunity to buy) is that financial markets across the globe have started to break through well-established trend lines that find their origin in the first quarter of 2009. I can only describe this as a major development. It should instantly attract every investor's full attention.

For someone who doesn't see himself as a technical analyst (and I am not) I have spent an inordinate amount of time these past days, staring at one year price charts for all sorts of assets, markets, indices and share prices. The reason I did this was because I had observed that global share markets had started to break below these trend lines. As weakness has persisted, commodity indices such as the Reuters Jefferies CRB Index have now also broken below their year-long support line.

At the very least this indicates that the trend in place since March 2009 has now ended. Full stop.

Here's an example of what I am talking about:

What are the possible implications? Under the most positive scenario this break in trend could prove temporarily only. As an example, in late 2003 (late stages of the 2000-2003 bear market) the Australian share market equally broke through its longer term trend line, after which the market broadly traded sideways for a while, albeit with a slight positive bias. One year later a new bull market was born and the share market never looked back, until late 2007.

A more common scenario, but not necessarily a blue print for the future, is the one provided by the EUR/USD. The cross broke through its trend line in early December last year and it has simply moved into the opposite direction ever since. If one ever wants to see a decisive change in trend, EUR/USD is one to look at today.

An interesting alternative is provided by WorleyParsons ((WOR)). When looking at its price chart, one can see how investors for an extended time simply refused to accept that the underlying trend for the shares had changed, resulting in the shares oscillating around the rising trend line. This is similar to what happened with the EUR/USD in 2008. As one can see from the chart below, ultimately, however, this always ends with a much steeper decline. This was also the case for EUR/USD in 2008.

Conclusion: a major trend has been broken in a decisive manner. We will have to find out what exactly will be the new trend, but we know the old one is no longer in place.

Are shares and commodities now being transformed into a buying opportunity? That depends on one's horizon and goals, but I am pretty certain it won't be the case for all shares and not for all commodities either.

One observation I have made is that many leading large caps in Australia have not yet broken through their trend lines. BHP Billiton ((BHP)), for instance, is still priced above $40 and Commbank ((CBA)) remains above $52. Some stocks, such as Leighton Holdings ((LEI)) and Qantas ((QAN)) could potentially experience a lot of weakness and still remain on the positive side of their trend lines.

For others, such as WorleyParsons (see above) and Boral ((BLD)) the reversal in trend has already occurred.

Special note for paying subscribers: I will follow up on this story with many more charts and graphs, if not on Thursday, then on Friday. Check the website if you haven't set any email alerts.

With these thoughts I leave you all this week,

Till next week!

Rudi Filapek-Vandyck

(as always firmly supported by the Ab Fab team at FNArena)

P.S. For the newcomers who have yet to catch up with my track record of the past few years: in June of 2007 I warned prices for uranium had peaked and weakness should be expected. At the time, spot uranium was at US$138/lb. Today it is at US$42.50/lb.

Later that year I stated analysts and economists worldwide were severely underestimating the true nature and impact of the subprime crisis in the US. From that moment on I declared all Australian banks should be regarded a Sell.

In late 2007 I concluded the market was looking expensive, though I did not foresee the savage downturn that was about to follow.

In the second quarter of 2008 I warned everyone that oil at such elevated prices would not be sustainable. Don't buy any oil stocks, I warned readers and subscribers at FNArena. Unfortunately, most would ignore my warning and go with the ruling market view.

In late August that year I predicted the most severe correction for commodities in human memory was about to unfold. Those readers and subscribers who acted on my warning still approach me and shake my hand whenever they see me at a conference or trade show.

In June last year I turned positive on global equities, Australian banks in particular. (I had predicted a rally for March, but had my doubts whether it would prove to be a lasting one).

Now it's January 2010 and once again I had to conclude that prices for commodities and share markets had run too high, too quickly. Today I conclude the firm trend in place since Q1 last year is now broken and no longer in existence.

By Andrew Nelson

If you've switched on a TV or picked up a paper lately, you'd know that the eurozone's public finances are under a lot of scrutiny these days. While it may not be wise to lump in the good countries with the bad, it would be prudent to know who the mischief makers are, as these countries are staring down the barrel of a sharp rise in sovereign risk if they don't get their ducks in a row, and soon.

This is especially the case in countries that have traditionally demonstrated poor budget management, like Greece and Portugal, and to a lesser degree, Italy. However, economies such as Spain and Ireland, which have gone though some severe cyclical corrections on the tail end of housing bubbles, are also looking at trouble on the horizon.

Economists from Credit Agricole point out that in Ireland and Spain, the deterioration of government finances and the build-up of public debt are fairly recent phenomena. In fact, as late as 2007 the budget situation in both of these countries was fairly healthy, with an average GDP surplus of 0.25% and 1.49%, which compares favourably with an average eurozone deficit of 1.85%.

However, in southern Europe, there is a long history of governmental struggle with public finances. Italy and Greece have traditionally been highly indebted countries where public deficits are mainly structural in nature. This is primarily due to a lack of public spending effectiveness and poor budgetary management. Thus, Greece, Italy and Portugal have also had considerably higher structural deficits than the eurozone average.

Italy, Greece and Ireland saw veritable boom times in 2000-2005, while Portugal's most recent time in the sun was 1995-2000. But the problem was that none of these five countries used their years of strong growth as an opportunity to reform their public finances while they had the chance. Because of this, the last ten years or more in Italy and Greece have been a time where public debt ratios surpassed 100% of GDP, while interest charges, which are admittedly lower than pre-erurozone years, still siphoned off over 5% of GDP each year.

During the boom times, Portugal, Spain and Ireland were able to maintain significantly lower levels of public debt, but now these are the countries that have experienced the worst deterioration in their public finances since the start of the global financial crisis.

The team from Credit Agricole thinks the pressures on public finances in all of the above mentioned countries are unlikely to get any better in the foreseeable future. The team predicts that government deficits and debt will undoubtedly grow in 2010, while the output gap will remain sharply negative.

However, the team also thinks it would be incorrect to lump all of these countries into the same basket, thus Credit Agricole has looked at a combination of factors to determine a sort of ranking system.

The team says their ranking system can be best explained by the level of primary deficit and of public debt forecast for 2010. Italy comes out with the lowest risk because of the low primary deficit forecast this year, which is only 0.6% of GDP. Conversely, Greece has the highest risk, as it combines a high initial primary deficit and public debt, at 125% of GDP.

There is an even bigger cloud looming on the horizon, though, and that is the increasingly strong impact of population ageing on state spending. Given the proportion of older people in the European population is steadily growing, CA believes the situation of public finances will inevitably continue to deteriorate in both the near and long term.

Citing European Commission projections, the team predicts that population ageing will severely impact public finances by decreasing government revenues and increasing spending, most notably on healthcare and pensions. Credit Agricole notes this is particularly the case for countries in southern Europe, where demographic changes are even more apparent and pensions particularly generous.

Major reforms have been implemented in Italy and Portugal to cope with these problems, but in Spain and even more so in Greece, little has been done to soften the impact of the demographic shock. In fact, by 2060 age-related expenditure will increase most in Greece, then Spain, while if current reforms are properly implemented, the rise in spending will be less pronounced in Portugal and Italy.

Yet the team thinks it is Ireland that will have to make the biggest fiscal effort given the recent and very severe deterioration in its structural primary deficit. Greece will also have to make a very substantial fiscal effort, due to the scale of its age-related spending, with ageing alone implying an additional fiscal effort of 7.7 points of GDP by 2060.

On the other hand, Italy has the lowest risk according to Credit Agricole, with the age-related related issues less of a problem because of a better overall fiscal situation and recent work towards structural reforms.

So what is the overall ranking between these bottom five of Europe?

In the short and, more importantly, the long term, Credit Agricole finds that Greece is by far the riskiest country. With a cocktail of high public debt, a severely degraded budgetary position and major demographic concerns.

Ireland and Spain come next, although the recent deterioration in their public finances is at least taking place in an environment where initial public debt levels are lower.

Portugal is facing problems that are more short-term in nature, with the longer term, age-related risks looking less problematic. However, the team notes that the structural weaknesses surrounding the Portuguese economy will continue to impact on public finances over the longer term.

That leaves us with Italy, which Credit Agricole sees as being the country with the lowest public finance related risk thanks to the fiscal efforts made in recent years combined with structural pension reforms.

By Andrew Nelson

If you've switched on a TV or picked up a paper lately, you'd know that the eurozone's public finances are under a lot of scrutiny these days. While it may not be wise to lump in the good countries with the bad, it would be prudent to know who the mischief makers are, as these countries are staring down the barrel of a sharp rise in sovereign risk if they don't get their ducks in a row, and soon.

This is especially the case in countries that have traditionally demonstrated poor budget management, like Greece and Portugal, and to a lesser degree, Italy. However, economies such as Spain and Ireland, which have gone though some severe cyclical corrections on the tail end of housing bubbles, are also looking at trouble on the horizon.

Economists from Credit Agricole point out that in Ireland and Spain, the deterioration of government finances and the build-up of public debt are fairly recent phenomena. In fact, as late as 2007 the budget situation in both of these countries was fairly healthy, with an average GDP surplus of 0.25% and 1.49%, which compares favourably with an average eurozone deficit of 1.85%.

However, in southern Europe, there is a long history of governmental struggle with public finances. Italy and Greece have traditionally been highly indebted countries where public deficits are mainly structural in nature. This is primarily due to a lack of public spending effectiveness and poor budgetary management. Thus, Greece, Italy and Portugal have also had considerably higher structural deficits than the eurozone average.

Italy, Greece and Ireland saw veritable boom times in 2000-2005, while Portugal's most recent time in the sun was 1995-2000. But the problem was that none of these five countries used their years of strong growth as an opportunity to reform their public finances while they had the chance. Because of this, the last ten years or more in Italy and Greece have been a time where public debt ratios surpassed 100% of GDP, while interest charges, which are admittedly lower than pre-erurozone years, still siphoned off over 5% of GDP each year.

During the boom times, Portugal, Spain and Ireland were able to maintain significantly lower levels of public debt, but now these are the countries that have experienced the worst deterioration in their public finances since the start of the global financial crisis.

The team from Credit Agricole thinks the pressures on public finances in all of the above mentioned countries are unlikely to get any better in the foreseeable future. The team predicts that government deficits and debt will undoubtedly grow in 2010, while the output gap will remain sharply negative.

However, the team also thinks it would be incorrect to lump all of these countries into the same basket, thus Credit Agricole has looked at a combination of factors to determine a sort of ranking system.

The team says their ranking system can be best explained by the level of primary deficit and of public debt forecast for 2010. Italy comes out with the lowest risk because of the low primary deficit forecast this year, which is only 0.6% of GDP. Conversely, Greece has the highest risk, as it combines a high initial primary deficit and public debt, at 125% of GDP.

There is an even bigger cloud looming on the horizon, though, and that is the increasingly strong impact of population ageing on state spending. Given the proportion of older people in the European population is steadily growing, CA believes the situation of public finances will inevitably continue to deteriorate in both the near and long term.

Citing European Commission projections, the team predicts that population ageing will severely impact public finances by decreasing government revenues and increasing spending, most notably on healthcare and pensions. Credit Agricole notes this is particularly the case for countries in southern Europe, where demographic changes are even more apparent and pensions particularly generous.

Major reforms have been implemented in Italy and Portugal to cope with these problems, but in Spain and even more so in Greece, little has been done to soften the impact of the demographic shock. In fact, by 2060 age-related expenditure will increase most in Greece, then Spain, while if current reforms are properly implemented, the rise in spending will be less pronounced in Portugal and Italy.

Yet the team thinks it is Ireland that will have to make the biggest fiscal effort given the recent and very severe deterioration in its structural primary deficit. Greece will also have to make a very substantial fiscal effort, due to the scale of its age-related spending, with ageing alone implying an additional fiscal effort of 7.7 points of GDP by 2060.

On the other hand, Italy has the lowest risk according to Credit Agricole, with the age-related related issues less of a problem because of a better overall fiscal situation and recent work towards structural reforms.

So what is the overall ranking between these bottom five of Europe?

In the short and, more importantly, the long term, Credit Agricole finds that Greece is by far the riskiest country. With a cocktail of high public debt, a severely degraded budgetary position and major demographic concerns.

Ireland and Spain come next, although the recent deterioration in their public finances is at least taking place in an environment where initial public debt levels are lower.

Portugal is facing problems that are more short-term in nature, with the longer term, age-related risks looking less problematic. However, the team notes that the structural weaknesses surrounding the Portuguese economy will continue to impact on public finances over the longer term.

That leaves us with Italy, which Credit Agricole sees as being the country with the lowest public finance related risk thanks to the fiscal efforts made in recent years combined with structural pension reforms.

US stocks lost more ground Friday taking losses for the month to their worst level since February 2009. The tech stocks led the retreat as investors pulled back on concerns the economic recovery is unsustainable at 2009 levels.

On Friday the market jumped out of the blocks on stronger than expected GDP, however drifted lower throughout the day as China’s plan to cap lending and Obama’s proposal to regulate the banking industry outweighed the earlier good news.

Earnings results this quarter are on track to be, on average, four-fold higher than the previous corresponding period.

GDP grew at an annual rate of 5.7%, double its third quarter rate, while in other economic indicators the consumer sentiment out of the University of Michigan and the Chicago PMI both outstripped expectations.

The Dow Jones shed 53.13, or 0.52% to 10,067.33. The S&P 500 dipped 10.66, or 0.98% to 1,073.87 while the tech-heavy NASDAQ lost 31.65, or 1.45% to 2,147.35.

Among the banks, Citigroup rallied 2.5%. Wells Fargo was effectively flat.

The investment banks performed worse however, with Goldman Sachs down 3% and Morgan Stanley shedding 2.6%.

Microsoft posted better than expected quarterly sales on the back of its Windows 7 software, however its shares still slumped 3.4%.

Apple was unable to maintain enthusiasm from the release of its new iPad computer earlier in the week. Its shares lost 3.6%.  

Search engines Google and Yahoo! shed 0.8% and 2.8% respectively.

Retailers were mixed. Wal-Mart tacked on 1.6%. Macy’s rose 1%.

In the negative Sears and Costco lost 1.3% and 1.2%.

Online retail giant Amazon.com gave up 0.5% despite also beating the street’s expectations on quarterly earnings.

COMEX gold for February delivery fell US60 cents to US$1,083 an ounce.

NYMEX light crude oil for February delivery fell US75 cents to US$72.89 a barrel.

Exxon Mobil shed 0.8%, while Chevron and ConocoPhillips lost 1.5% and 0.7% respectively.

European Markets

European stocks countered losses on Wall Street, however their overall performance for the month of January was, like the US, their worst since February 2009. The dismal economic state of European Union member Greece rattled investor confidence, as did Chinese lending restrictions, though investors on Friday got comfort from solid US earnings reports.

The UK benchmark FTSE 100 gained 42.78, or 0.83% to 5,188.52. The French CAC40 lost 50.67, or 1.37% to 3,739.46, while Germany’s DAX rallied 68.46, or 1.24% to 5,608.79.

In a look around the European bank stocks, in the UK Barclays and HSBC put on 2.1% and 2.6%, though RBS shed 0.8%.

In France Societe Generale and BNP Paribas added 0.9% and 2.1%. Germany’s Deutsche Bank climbed 1.4%.

There was good news for the much-maligned Greek banks, with the National Bank and Alpha Bank surging 5% and 8.8% respectively.

Italian automaker Fiat slumped 7.7% after predicting a 12% slump in the European car market.

Germany’s Daimler Chrysler, however, surged 3.4%. French carmakers Peugeot and Renault climbed 1.4% and 0.9%.

Europe’s second largest clothes maker Hennes & Mauritz AB surged 9.1% after posting a US$834 million net profit in the fourth quarter.

Miners generally rose despite a fall in metal prices on the LME Friday.

Aussie peers Rio Tinto and BHP Billiton climbed 1.3% and 1.5% respectively.

Xstrata and Anglo American climbed 2.7% and 1% respectively.

Japanese Markets

Japan’s Nikkei closed at a six-week low as disappointing earnings results dragged the index lower. Exporters struggled on fears the greenback would continue to weaken, therefore impact earnings.

The Nikkei 225 fell 216.25, or 2.08% to 10,198.04.

Advantest Corp sank 10.2% after forecasting a larger annual loss than consensus estimates.

Toyota lost 2% as the automaker extended a recall of millions of vehicles to Europe and China.

Honda weakened 2.1%, while electronics companies Canon and Sony dropped 3.9% and 2.4%.

Nintendo shed 4.1% as a decline in software sales for its DS handheld game player and price cuts for its Wii console resulted in a 23% fall in quarterly profit.

Nippon Steel fell 1.5% as the steelmaker forecast its first annual loss in seven years due to a slump in local building.

Fanuc gained 1.8% after increasing its full-year earnings outlook, citing a significant recovery in demand.

Hong Kong Market

The Hong Kong markets ended the week and month lower Friday, helping the Hang Seng to its worst month out of the last 15. Stocks retreated on US unemployment figures, while Li & Fung surged as it aims for US$20 billion in revenue this year.

The Hang Seng lost 234.38, or 1.15% to 20,121.99.

Among the banks, Bank of China was down 1.3%. ICBC was down just over 2% and Bank of Communications was 1% cheaper.

HSBC, which makes up one-sixth of the market, lost 1.7%.

Li & Fung surged 10.2% after signing a fresh deal with Wal-Mart rumoured to be worth US$2 billion a year.

Shoemaker Yue Yuen Holdings slid 3.2%.

The shippers lost ground. China Cosco slumped 3.5% and Cosco Pacific shed 4.2%. The Baltic Dry Index, a measure of shipping costs, has slumped more than one-third since mid-November.

Coal miners were also down. China Shenhua Energy Co slid 1.8%. Yanzhou Coal Mining Co, gave up 3.3%.

US stocks lost more ground Friday taking losses for the month to their worst level since February 2009. The tech stocks led the retreat as investors pulled back on concerns the economic recovery is unsustainable at 2009 levels.

On Friday the market jumped out of the blocks on stronger than expected GDP, however drifted lower throughout the day as China’s plan to cap lending and Obama’s proposal to regulate the banking industry outweighed the earlier good news.

Earnings results this quarter are on track to be, on average, four-fold higher than the previous corresponding period.

GDP grew at an annual rate of 5.7%, double its third quarter rate, while in other economic indicators the consumer sentiment out of the University of Michigan and the Chicago PMI both outstripped expectations.

The Dow Jones shed 53.13, or 0.52% to 10,067.33. The S&P 500 dipped 10.66, or 0.98% to 1,073.87 while the tech-heavy NASDAQ lost 31.65, or 1.45% to 2,147.35.

Among the banks, Citigroup rallied 2.5%. Wells Fargo was effectively flat.

The investment banks performed worse however, with Goldman Sachs down 3% and Morgan Stanley shedding 2.6%.

Microsoft posted better than expected quarterly sales on the back of its Windows 7 software, however its shares still slumped 3.4%.

Apple was unable to maintain enthusiasm from the release of its new iPad computer earlier in the week. Its shares lost 3.6%.  

Search engines Google and Yahoo! shed 0.8% and 2.8% respectively.

Retailers were mixed. Wal-Mart tacked on 1.6%. Macy’s rose 1%.

In the negative Sears and Costco lost 1.3% and 1.2%.

Online retail giant Amazon.com gave up 0.5% despite also beating the street’s expectations on quarterly earnings.

COMEX gold for February delivery fell US60 cents to US$1,083 an ounce.

NYMEX light crude oil for February delivery fell US75 cents to US$72.89 a barrel.

Exxon Mobil shed 0.8%, while Chevron and ConocoPhillips lost 1.5% and 0.7% respectively.

European Markets

European stocks countered losses on Wall Street, however their overall performance for the month of January was, like the US, their worst since February 2009. The dismal economic state of European Union member Greece rattled investor confidence, as did Chinese lending restrictions, though investors on Friday got comfort from solid US earnings reports.

The UK benchmark FTSE 100 gained 42.78, or 0.83% to 5,188.52. The French CAC40 lost 50.67, or 1.37% to 3,739.46, while Germany’s DAX rallied 68.46, or 1.24% to 5,608.79.

In a look around the European bank stocks, in the UK Barclays and HSBC put on 2.1% and 2.6%, though RBS shed 0.8%.

In France Societe Generale and BNP Paribas added 0.9% and 2.1%. Germany’s Deutsche Bank climbed 1.4%.

There was good news for the much-maligned Greek banks, with the National Bank and Alpha Bank surging 5% and 8.8% respectively.

Italian automaker Fiat slumped 7.7% after predicting a 12% slump in the European car market.

Germany’s Daimler Chrysler, however, surged 3.4%. French carmakers Peugeot and Renault climbed 1.4% and 0.9%.

Europe’s second largest clothes maker Hennes & Mauritz AB surged 9.1% after posting a US$834 million net profit in the fourth quarter.

Miners generally rose despite a fall in metal prices on the LME Friday.

Aussie peers Rio Tinto and BHP Billiton climbed 1.3% and 1.5% respectively.

Xstrata and Anglo American climbed 2.7% and 1% respectively.

Japanese Markets

Japan’s Nikkei closed at a six-week low as disappointing earnings results dragged the index lower. Exporters struggled on fears the greenback would continue to weaken, therefore impact earnings.

The Nikkei 225 fell 216.25, or 2.08% to 10,198.04.

Advantest Corp sank 10.2% after forecasting a larger annual loss than consensus estimates.

Toyota lost 2% as the automaker extended a recall of millions of vehicles to Europe and China.

Honda weakened 2.1%, while electronics companies Canon and Sony dropped 3.9% and 2.4%.

Nintendo shed 4.1% as a decline in software sales for its DS handheld game player and price cuts for its Wii console resulted in a 23% fall in quarterly profit.

Nippon Steel fell 1.5% as the steelmaker forecast its first annual loss in seven years due to a slump in local building.

Fanuc gained 1.8% after increasing its full-year earnings outlook, citing a significant recovery in demand.

Hong Kong Market

The Hong Kong markets ended the week and month lower Friday, helping the Hang Seng to its worst month out of the last 15. Stocks retreated on US unemployment figures, while Li & Fung surged as it aims for US$20 billion in revenue this year.

The Hang Seng lost 234.38, or 1.15% to 20,121.99.

Among the banks, Bank of China was down 1.3%. ICBC was down just over 2% and Bank of Communications was 1% cheaper.

HSBC, which makes up one-sixth of the market, lost 1.7%.

Li & Fung surged 10.2% after signing a fresh deal with Wal-Mart rumoured to be worth US$2 billion a year.

Shoemaker Yue Yuen Holdings slid 3.2%.

The shippers lost ground. China Cosco slumped 3.5% and Cosco Pacific shed 4.2%. The Baltic Dry Index, a measure of shipping costs, has slumped more than one-third since mid-November.

Coal miners were also down. China Shenhua Energy Co slid 1.8%. Yanzhou Coal Mining Co, gave up 3.3%.

Substantial Shareholder Changes 
29 January 10

All movements are percentage changes

Shares continued to retreat in the afternoon, down more than 2.2% by the close, and 7.7% in the last three weeks. The market lost ground following persistent weakness from its internationals peers, with many heading for their worst month since February 2009.

The major sell-off continued in resource and energy stocks although banks also contributed to the losses.

The market closed at its lowest level since the last week of November.

At the end of the day, the All Ords was down 100.8 to 4,596.9, while the ASX/200 fell 103.7 to 4,569.6. About 3.6 billion shares worth around $7.3 billion had changed hands.

CBA shed $1.87, or 3.4% to $53.23 to be the major drag among the big four banks.

Westpac lost 72c, or 2.9% to $23.86, while ANZ and NAB were 1.9% and 1.2% below the gain line.

The Banks and Financials sector lost 2%.

Macquarie Group slid 86c to $50.16 as Charter Hall confirmed it was in discussions with the investment bank regrading the acquisition of parts of its real estate funds management platform.

Charter Hall shares rose 0.5c to 66c to be one of the few stocks within the Property Trusts sector in the black. 

Goodman Group and Mirvac fell 4.1% and 3% to 58.5c and $1.455. 

The sector weakened 1.2%.

BHP Billiton and Rio Tinto took a combined 23 points off the broader indices to be trading at $39.40 and $68.00 respectively. Rio Tinto has had over 15% wiped off its value since recent highs of $80.14 on 11 January.

The Materials and Resources sector fell 3.4%.

This morning, BHP said it would invest $2.15 billion into growing its Western Australia iron ore business, representing the start of the company’s Rapid Growth Project 6 project, aimed at increasing BHP’s iron ore capacity to 240 million tonnes by 2013. The company also announced it had reached an agreement to buy Canadian potash miner, Athabasca Potash Inc. for $357 million.

Fortescue fell 2.4% to $4.53; it was one of the few stocks to improve its position from lunch.

Meanwhile, steelmakers Bluescope and Onesteel shed 2.6% and 3.4% to $2.62 and $3.11.

Newcrest dipped 60c to $31.53 as UBS cuts its target price on the gold producer.

The price of the precious metal reached its lowest level in almost three months in early trade last night before recovering most of the fall.  Lihir lost 12c to $2.77.

Chemicals companies Orica and Incitec Pivot had lost most of the ground made yesterday to both be down 3.4%.

The Energy sector was led 1.9% lower by consistent falls among the majors and even sharper declines from coal stocks.

Woodside shed $1.35, or 3.1% to $42.33, while Oil Search fell 10c, or 1.9% to $5.26.

AWE lost 14c, or 5.1% to $2.62 after downgrading it FY10 production forecast as a result of an extended project shutdown.

Origin shed 8c, or 0.5% to $16.02. The company reported a 16% increase in revenue for the quarter to 31 December over the previous corresponding period.

Whitehaven continued its slide after UBS downgraded its rating on the coalminer’s shares to ‘neutral’ due to recent share price appreciation, while also upgrading its target price. Whitehaven shares were down 27c, or 5.7% to $4.43.

Coal stocks Centennial and Aquila were 3.9% and 5.7% in the red.

Oilfield engineering firm WorleyParsons was up 10c at $23.59 after securing, alongside JV partner Transfield Services, a $700 million contract to supply brownfield project and maintenance services to Woodside.

Transfield shed 10c to $3.58 as the Industrials sector weakened 2.2%.

Asciano and CSR fell 2.3% and 2.9% to $1.71 and $1.825.

Yesterday, it was revealed the airline industry experienced its largest drop in passenger traffic since the end of World War II in 2009. However, expectations are for a recovery in 2010.

Virgin and Qantas slid 0.9% and 1%, while Air New Zealand rallied 8% to $1.01.

Programmed Maintenance services lost over 10% on a profit downgrade as less companies take preventative painting measures.

The Consumer Staples sector weakened 1.6%. Wesfarmers shed 74c, or 2.6% to $27.51.

Woolworths edged 33c lower to $25.86 after announcing yesterday it would introduce permanent price reductions on 3,500 packaged grocery products.

Beverage maker Coca-Cola Amatil was flat. Foster’s gained 2c to $5.34 after announcing the appointment of John Pollaers to the role of managing director, Carlton and United Breweries.

Retailers and media stocks led the Consumer Discretionary sector 1.4% lower.

Harvey Norman and JB Hi-Fi fell 3.9% and 4% to $3.68 and $20.17, while Ten Network dropped 2.2% to $1.535.

Gamer Crown gained 10c to $7.76, while Tabcorp lost 20c, or 2.8% to $7.03.

An 8c fall to $3.34 from Telstra saw the Telecommunications sector 2.2% lower.

Among the Healthcare sector, CSL rallied 33c, or 1.1% to $31.18. Yesterday the formerly government-owned Commonwealth Serum Laboratories announced it would team up with Patrys to develop some of their cancer treatment therapies.

Patrys, meanwhile, lost 17.5% today.

The broader sector was down 0.2%.

The Utilities sector gained 0.2% to be the only sector in positive territory. AGL Energy and Prime Infrastructure added 0.4% and 4.8% respectively.

Around the region, the Nikkei 225 lost 158.7 to 10,255.6, while the Straits Times Index shed 16.4 to 2,741.3. Meanwhile, the NZSE50 fell 27.8 to 3,155.8. The Hang Seng lost 158.2 to 20,198.2

Spot gold was trading at US$1,081.82 per ounce, and the Aussie was buying US$0.8908.  

Origin Energy reported a 2% increase in production and a 16% increase in sales revenue for the quarter to December 2009 compared with the previous corresponding period. The company said the increases were primarily due to gas sales from storage, increased production from New Zealand assets, and higher liquids prices.

At the bell, Origin shares were down 8c to $16.02.

AWE downgrades FY production guidance
AWE downgraded its production guidance for FY10 to 6.2mmboe, citing a further extension of the BassGas maintenance shutdown and work-over project in addition to some production decline in the onshore Perth Basin. The company’s previous guidance was 6.5 million boe.

At the finish, AWE shares were down 14c to $2.62.

CHC in talks to buy MQG real estate platform
Charter Hall Group confirmed that it was in discussions with Macquarie Group regrading the acquisition of parts the latter’s real estate funds management platform. The announcement was in response to recent media speculation.

At the end of the day, Macquarie Group shares were down 86c to $50.16, Charter Hall Group securities added 0.5c to 66c and Macquarie Office Trust securities were unchanged at 29.5c.

ESG expects increase in production rates
Eastern Star Gas expects gas production rates to increase significantly after dewatering of, and gas production from, a tri-lateral pilot was temporarily suspended during January. The suspension was owing to access road restrictions preventing mechanical adjustments to handle rapidly climbing gas production, the company said.

At the close, Eastern Star Gas shares were down 4c to 77.5c.

Macarthur updates market on transactions
Macarthur Coal has updated the market on its bid for Gloucester Coal and other conditional acquisitions of assets from Noble Group. The company said it expects to hold a shareholder meeting in relation to transactions in mid April 2010.

At the end of the session, Gloucester Coal shares were down 27c to $8.25, while Macarthur Coal shares dropped 81c to $9.45.

ERA FY profit jumps 23%
Energy Resources of Australia reported NPAT for year ended 31 December 2009 was $272.6 million, up 23% on the previous year. The company said revenue from both sales of uranium and continuing operations were up 55% in the same period to $767.8 million and $780.6 million respectively. 

At the bell, ERA shares were up 7c to $20.95.

AIA completes insto offer
Auckland International Airport completed the institutional entitlement offer component of its 1 for 16 fully underwritten entitlement offer.  The offer was announced on 27 January 2010, and is expected to raise a total of approximately NZ$126.4 million ($99.4 million).

Auckland International Airport shares remain halted at $1.465.

PRG downgrades guidance
Programmed Maintenance Services downgraded its FY10 EBITA forecast from $63 million to a range of $57 million to $60 million citing lower than expected discretionary or expansionary works being committed by customers in painting operations across Australia, New Zealand and UK. In addition the company said the Maritime Union of Australia is pursuing a wage claim that is not “acceptable” to its business or any clients.

At the finish, Programmed Maintenance shares were trading down 38c to $3.28.

Transfield, Worley JV secures $700m contract
Transfield Services and oilfield engineering firm WorleyParsons said their 50/50 joint venture Transfield Worley Services had secured a $700 million contract to supply brownfield project and maintenance services to Woodside Petroleum Limited’s (WPL) onshore LNG facilities in Western Australia.

At the close, WorleyParsons shares were up 10c to $23.59 and Transfield Services shares were down 10c to $3.58.

BHP buys Canadian potash miner for $357m
BHP Billiton said it had reached an agreement to buy Canadian potash miner, Athabasca Potash Inc (“API”). The Aussie miner said it would acquire all the shares of the company for C$8.35 per share (A$8.75), for a total consideration of C$341 million (A$357 million).

At the end of the day, BHP Billiton shares were down $1.30 to $39.40.

BHP invests $2.15bn into WA iron ore
In another announcement Friday morning by the big Australian, BHP Billiton said it would invest $2.15 billion into growing its Western Australia iron ore business. The money represents the start for the company’s Rapid Growth Project 6 (RGP6) project, aimed at increasing BHP’s iron ore capacity to 240 million tonnes by 2013.

Origin Energy Limited (ORG) reported a 2% increase in production and a 16% increase in sales revenue for the quarter to December 2009 compared with the previous corresponding period (“pcp”). The company said the increases were primarily due to gas sales from storage, increased production from New Zealand assets, and higher liquids prices.

Origin said production and revenue for the December quarter were 7% and 10% lower respectively than the previous quarter.

Executive director, Finance and Strategy, Karen Moses, said the exploration and production business delivered production in line with guidance together with substantial progress across new developments such as Kupe and Talinga, drilling success in the Bass and Perth basins, agreement to acquire additional interests in the Otway Basin, and the acquisition of new opportunities in south east Asia.

Origin said production and sales revenue for the half year to December 2009 were 14% and 9% respectively lower than in the pcp. The company attributed the decrease to the 50% dilution of Origin’s share of CSG following the Australia Pacific LNG transaction together with lower contractual off-takes during the period and natural field decline.

“Production from the areas now held through Australia Pacific LNG joint venture grew by 24% when compared with the prior Half Year,” Ms Moses said.

“Further developments regarding the Australia Pacific LNG project included the awarding of three significant contracts for drilling and design, engineering, procurement and construction activities, as well as lodgement of the Project’s Environmental Impact Statement.”

As at 1427 AEDT, Origin shares were down 7c to $16.03.