Crikey

The market is up 51. The SFE Futures suggested a 66 point rise in the market this morning.

The Dow Jones was up 133 overnight – It moved in a 177 point range and finished 1% higher on the back of positive news from blue chips and easing concerns about the credit market. Despite recently having to borrow $11.5bn and sell $2bn worth of notes to the Bank of America to keep their retail banking and mortgage business afloat, Countrywide Financial Corp rose after announcing they had $12bn in financing through new and existing credit lines. General Motors closed up 10% on speculation that talks between the company and workers on health care costs had reached a positive outcome, and McDonald’s finished at an all time high (up 6%) on the back of yesterday’s decision to up their dividend payout by 50%. In other news, Warren Buffett’s Berkshire Hathaway sold $136m worth of stock in PetroChina realizing a 600% profit over what they paid back in 2003, and energy stocks continued their good run after the oil price closed above $80 for the first time. The NASDAQ had a quiet session closing up 0.3%.

There is a bit going on today with our two biggest resource companies, BHP up 65c to 3930c. The Australian has reported this morning that they are considering offshore prefabrication of smelting equipment for their Olympic Dam expansion program because of a lack of skilled labour in Australia. RIO up 94c to 9893c. They have announced they will join the FTSE4Good Index which measures the performance of companies that meet globally recognized corporate responsibility standards. Metals all up overnight, both Aluminium and Copper up 1.6%, Zinc up 3.8% and Nickel up 2.9%. Zinifex up 36c to 1618c. Oil price up 20c to $80.05 after Hurricane Humerto shut down three refineries in Texas. Woodside up 27c to 4688c. Gold down $2.80. Lihir Gold (LGL) up 3c to 334c. Newcrest is still in a trading halt…back on Monday.

• Main market story is Northern Rock building society in the UK reporting more problems with sub-prime exposures and is requesting emergency funding from the Bank of England. The UK pound falling on the news.
• Merrill Lynch had a BUY recommendation on Rams Home Loans yesterday with a 120c target price – seems no one noticed it until the AFR wrote it up on their back page today. Price up 15% to 82c.
• Despite an independent valuation of 1621c to 1823c the board of Coles (CGJ) are still unanimously recommending the bid from Wesfarmers (WES) which is worth around 1480c. Coles shareholders will vote on the deal in early November. The independent experts say the bid is still in the best interests of shareholders…in other words….Coles have no other options on the table and have to take what they are given. It all means Wesfarmers are buying it at a bargain price relative to the 1725c a lot of brokers were factoring causing SELL recommendation on Wesfarmers. WES is on a 17x PE with a 5.7% fully franked yield. WES up 25c to 3880c and CGJ up 12c to 1463c.
• CSL announced details of their previously announced 3 for 1 share split. One fully paid ordinary share will be subdivided into three, (from 183,230,042 shares to 549,609,126) and options and performance rights on issue will also be adjusted. Basically they want to increase liquidity and make them more affordable for retail investors. Shareholders will approve the split at the company’s AGM on October 17. CSL up 101c to 10077c. Theoretically has no impact. In reality it is usually a small positive.
• Former Fed Chairman Greenspan: (of Ben Bernanke) “I think he is doing an excellent job”…”I’m not sure I would have done anything different [if chairman today]”.
• Ex dividend today - AAC CAB FEA OXR PMR WEB

Quiet day today – the Jewish New Year holiday yesterday has thinned the ranks - will have the usual lists in the MARCUS TODAY newsletter today – cheapest stocks in the ASX 200 and the highest gross yields.

Have a good weekend. You have my permission to take the rest of the day off.

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