The market is down 65. The SFE Futures suggested a 77 point fall in the market this morning.

The Dow Jones was down 129 moving in a 154 point range and closing lower for the second consecutive session on the back of economic data increasing concerns about inflation and higher interest rates. The Government announced that labour costs increased 1.8% in the previous quarter, higher than the 1.3% rise expected and three times faster than the government’s previous estimate three months ago. Productivity numbers were in line with expectations. In takeover activity, TD Ameritrade Holding Corp. closed up 3.8% on talk that two hedge funds that own stock in the company were pushing for it to merge with either E*Trade Financial or Charles Schwab. Railroads finished lower after UBS Warburg said Union Pacific Corp. and Burlington Northern Santa were likely to cut their earnings forecasts and energy stocks has a good session thanks to a higher oil price. The NASDAQ closed down nearly 1%.

The US market wasn’t helped by the Richmond Fed president saying there was no significant moderation in the inflation trend yet and it was difficult to tell if the housing market had bottomed.

Just about everything is down today, including resources. BHP down 49c to 3257c and RIO down 186c to 9324c. Metals all down overnight, Copper down 1.6%, Zinc down 2.7% and Nickel 1.5%. Zinifex down 25c to 1785c. Aluminium down 2.2%. Oil price up 34c to $65.97 on the back of news that several thousand Turkish troops had crossed into northern Iraq to fight Kurdish guerrillas. Woodside down 73c to 4342c. Gold down 30c. Newcrest up 12c to 2373.

The market is having a shocker of a week ahead of the long weekend. Lots of talk about interest rate rises after the strong GDP numbers yesterday. Making the emails this morning is the news that Morgan Stanley have issued a Triple Sell Warning” on European stocks – the first such indication since the 2000 tech boom. It comes from Teun Draaisma, chief of European equities strategist.

  • JB Hi-Fi (JBH) flying this morning after announcing a profit upgrade this morning on the back of stronger than expected trading since February. They now expect 2007FY profit to be between $37 and $39m representing a 43% to 51% increase on last year’s NPAT of $25.8m. Sales are expected to be around 30% higher in excess of $1.2bn. JBH up 77c or 8.3% to 1004c and is up 371% since listing in 2003 at 210c.
  • Coates Hire (COA) down 14c to 601c on the back of their announcement saying NPAT for the current financial year was likely to be below the lower end guidance of $106m given to the market is February this year. Coates recently announced they had had a bid approach.
  • Macquarie have upgraded their earnings number on Seek Ltd (SEK) by 2.7% after strong ANZ on line Ad volume growth figures…up 40.8% on pcp in May. Annual growth rate is 25%. They now forecast 66.5% growth in EBITDA for the full year. NPAT up 64%. They have a 12 month target price of 723c and retain an OUTPERFORM recommendation. Now 741c.
  • The AFR has reported this morning that Woolworth CEO Michael Luscombe wrote to the board of NZ-based Warehouse Group proposing a NZ$2.2bn takeover or NZ$7.15 a share. It also mentioned that local rival Foodstuffs had “verbally” told the Warehouse that it was willing to pay up to NZ$7.75 a share.
  • Orica (ORI) down 8c to 3128c after announcing they have made an indicative offer for German-based mining services company (booomm sector) Dywidag-Systems worth A$1.62bn. Seems they are not the only company putting in an offer.
  • Alcan has rejected the Alcoa bid — why not when half the rest of the resources sector are rumoured to be bidders as well. Alcoa say they “continue to evaluate all options”. AWC down 13c to 1785c.
  • AWB ex dividend.
  • Citigroup have a bit of research out on the nickel sector upping nickel prices by 50%. They have upgraded Jubilee Mines to a BUY and started research coverage of Sally Malay with a BUY and a 585c target price. Now 417c.
  • Toll Holdings (TOL) up 35c to 1361c against the trend as UBS Warburg publish a BUY recommendation with a 1600c target price.
  • Goldman Sachs JB Were have a bit of research out entitled “Copper is King”. They have a BUY/OUTPERFORM recommendation on RIO, BHP, KZL, EQN, PNA, OXR, ABY.
  • Cemex have 49.5% of Rinker now….almost at the 50% minimum acceptance level. The offer closes 22 June.
  • Barclays Group has ceased to be a substantial shareholder of BHP.

All this and more is available on the Marcus Today website from 8am onwards.

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Peter Fray

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