The market is down 46. The SFE Futures suggested a 32-point fall in the market this morning.

The Dow Jones was down 14 points overnight moving in an 144-point range and closed down for the third consecutive session on the back of disappointing economic news and energy stocks finishing lower after a 1.5% fall in the oil price. The Dow Jones was up nearly 100 points early in the session but retreated on the back of the Commerce Department announcing sales of new homes fell (1.6%) in June and on the consumer confidence index coming in at a lower-than-expected 103.9 last month, economists had expected a reading of 105. Bear Stearns announced they would offer $1.6bn, only half the amount they offered last week, to rescue one of their money-losing hedge funds that had heavily invested in bonds backed by subprime loans, and in takeover activity, Energy East Corp. closed 16.5% higher after Spanish company Iberdrola said they would offer $4.5bn in cash for the company. The NASDAQ closed down 0.1%.

Resources having a bad day. BHP down 15c to 3466c and RIO down 34c to 9795c. Metals all down overnight, Copper down 1.6%, Nickel down 4.3% and Aluminium 0.8%. Zinc down 3.8%. Zinifex down 4c to 1859c. Oil price down $1.05 to $67.78 on forecasts that tomorrow’s government report will show an increase in oil and fuel inventories. Woodside down 44c to 4525c. Gold down $9.40. Newcrest down 28c to 2329c.

The Yen Carry Trade is back in the news — the Yen has had a strong night on the back of comments from the Japanese Minister of Finance who warned currency traders about betting one-way against the Japanese currency. It is seen as a sign that the Japanese economy will improve, inflation will pick up and that interest rates will rise. It is clearly a threat to the US$ if all those things do happen … the Japanese are carrying massive US Treasury Bond positions and a more attractive domestic Japanese growth scenario will prompt a reversal of the Yen Carry Trade. If you don’t know what the yen carry trade is, all you need to understand is that the collapse of the Yen carry trade would have the same impact as Bruce Willis failing to stop that asteroid hitting the northern hemisphere. Clearly it isn’t happening yet – the US$ has been appreciating against the Yen for the last two years.

Lots of company related news today…

  • Coca-Cola Amatil (CCL) down 16c to 911c despite upgrading their 1H EBIT guidance this morning to +12%, up from their previous forecast of high single-digit growth. But the stock is down on comments about slow sales from the South Korean operation which they are trying to sell. A problem that might affect the $700m price tag they are hoping to get. The stock is up 28% in the past year.
  • GRD Ltd (GRD) the resource contracting and development company involved in waste disposal, minerals processing and mining and construction services confirmed an AFR story this morning that they have had a bid approach from Transfield Services (TSE) The approach was at 270-275c. GRD now 237c. They are considering the proposal. Stock in a trading halt.
  • Gloucester Coal (GCL) up 2c today to 500c after closing nearly 5% higher yesterday on the back of Noble Group, Asia’s largest diversified commodities trading company, buying a 10% stake to block Xstrata’s 475c a share cash bid. Xstrata not having the best of times when it comes to acquiring Australian companies, it wasn’t long ago that BHP Billiton (BHP) pushed them aside to acquire WMC Resources.
  • Healthscope (HSP) announced they have signed an agreement with Westpac (WBC) to establish a Receivables Securitisation Program with an initial limit of $110m. Basically the agreement provides HSP with an off balance sheet financing alternative at a lower cost. HSP down 5c to 525c.
  • Atom Energy (AXY) up another 9c today or 16% to 68c after yesterday listing at 30c. The company raised $10m primarily for exploration.
  • Qantas (QAN) down 2c to 558c – They managed to sell their 4.2% stake in Air New Zealand overnight for around 270c a share. In a twisted way it has been declared as a positive by some brokers because it removes an overhang. Won’t stop all the institutional flippers selling it for a quick profit.
  • Goldman Sachs JB Were have dropped their forecasts on Virgin Blue today by 16% and 41% on higher oil price forecasts. Target price 283c. Price now 243c down 6c.
  • Morgan Stanley have a 375c target price on Telstra. Price now 465c down 4c today.
  • ABC Learning (ABS) down 10c to 699c, a director of the company has bought 150,000 ABS on market at 702c.
  • Charlie Aitken at Southern Cross Equities is talking about Brambles (BXB) being the next private equity bid target. The BXB Chairman (Don Argus no less) upped his holding by buying 25,200 shares at 1189c this week.

We have an article in the newsletter today explaining the Yen Carry Trade.

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