Morning Market Report

Friday, 8 June 2007

Morning Market Report

Marcus Padley, sharemarket analyst and author of the Marcus Today daily newsletter, reports:

The market is down 97. The SFE Futures suggested a 91 point fall in the market this morning.

The Dow Jones closed down 198 – It moved in a relatively large 221 point range and closed 1.5% lower on the back of rising bond yields increasing the likelihood of a rate rise by the Federal Reserve. The Dow Jones has now lost 410 points in the past three days. All 16 homebuilders in the S&P 500 finished lower on worries that demand for mortgages will fall, and retailers had a shocker after most reported sales that missed analysts’ expectations. The combination of higher bond yields and a government report yesterday saying labour costs had increased more than expected has knocked 3% off the Dow Jones index and 3.2% from the S&P 500 in the last three days alone. The NASDAQ fell nearly 2%.

Everything is in the red today, including resources. BHP down 33c to 3260c and RIO down 215c or 2.3% to 9135c. Metals mostly down overnight, Zinc down 0.8%, Aluminium down 0.3% and Nickel down a huge 6.1%. Zinifex down 21c to 1781c. Copper up 0.1%. Oil price up 96c to $66.93 on concerns that US refineries are not keeping up with the high demand. Woodside down 63c to 4367c. Gold down $4.10. Newcrest down 45c to 2345c.

Just when we were all hoping for a non-eventful Friday leading into the long weekend, our market has followed Wall Street’s mood and is also down 1.5%. Higher bonds yields and concerns over a possible interest rate hike being the reason. Nickel stocks are down across the board after a 6% fall in the Nickel price overnight.

Woolworths (WOW) down 24c to 2726c after New Zealand’s Commerce Commission (NZCC) knocked back any potential bids for The Warehouse by WOW or Foodstuff saying they’re not satisfied that a takeover would not “substantially lessen” competition. WOW announced this morning they will review their options in light of the NZCC’s decision. WOW down 24c to 2726c.
Cemex group now has over 50% of Rinker Group (RIN) and has declared their US$14.25bn takeover bid unconditional. So far so good for Cemex…now to get to 90% for a compulsory acquisition. Perpetual have agreed to sell their 10.5% stake but AFIC say they will reject the offer. (They own less than 1%)
Energy Resources of Australia (ERA) has announced this morning they expect a 1H loss of A$5m-$10m due to heavy rain in February and March. They did however reaffirm previous production guidance for 2007 and 2008. ERA down 53c to 2187c.
Loads of broker upgrades today for JB Hi-Fi (JBH) on the back of yesterday’s FY07 NPAT upgrade. UBS Warburg have a 1110c target price and say they JBH is likely to outperform in FY08 and that further positive earnings revisions are likely.
Fortescue Metals (FMG) down 4.93% today and is down 18% since hitting a record high on Tuesday (4165c). FMG was the best performing stock last month putting on an impressive 69%. FMG’s iron ore production is due to commence in late 2008.
RMA Energy (RMT) up another 27c or 31% to 112c today after their share price triplied on its debut yesterday. Shares in the Uranium, tin and copper explorer closed at 85c or 240% above its issue price of 25c. It now has a market cap of $15.8m.
Flinders Resources (FND) have also made an impressive debut climbing up 15c or 27% to 70c. The company issued 47.4m shares at 55c and raised around $6m. FND develops mining operations in two pre-development projects in Asia.
The AFR has reported this morning that ANZ Chairman Charles Goode is looking to stay with the bank for another three years.
The market is closed on Monday for the Queen’s Birthday holiday.