The market is down 28. The SFE Futures suggested a 22 point fall in the market this morning. It is very quiet on the news front.
The Dow Jones closed down 48 overnight – It moved in a 141 point range and finished lower after rising 412 points since the rate cut. Profit taking and disappointing earnings results did the damage. Bear Stearns and Circuit City both announced bigger-than-expected falls in 3Q earnings. Homebuilders fell 6%, the most in two years. The Conference Board said its index of leading indicators fell in August. Federal Reserve Chairman Ben Bernanke didn’t give much away in his comments on the mortgage and credit market overnight. He said that the credit crisis has created “significant market stress” and that regulators will be doing all they can to limit the damage. The market is already speculating about another 25bp rate cut next month. The NASDAQ index finished slightly lower; Nasdaq Stock Market Inc. closed up after announcing together with Borse Dubai that they will take over Nordic bourse operator OMX AB, and that Borse Dubai will buy around 20% of Nasdaq and 28% of the London stock exchange.
MAIN THEME – US$ down – after the 50bp interest rate cut in the US the fate of the US$ seems to be sealed. It is going down, worried by further rate cut prospects. Euro hits record high. Saudi Arabia thinking of de-coupling their currency from the US$. The Canadian dollar hit parity for the first time since 1976.
Resources doing well…BHP up 24c to 4125c and RIO up 18c to 10288c. Metals mostly down overnight after a spectacular night the day before, Nickel down 3.7%, Zinc down 2.8% and Aluminium 1.7%. Copper up 0.1%. Zinifex up 18c to 1706c. Oil price up $1.86 to $83.85 and again closed in record territory. After the fall in the US$ OPEC are thought to be less likely to raise production. A fall in the US$ makes oil cheaper for the rest of the globe negating the need for OPEC to lower the price with production increases. Woodside up 34c to 4871c. Gold up $10.41. Newcrest down 21c to 2859c. The stock is up 24% since their $2bn equity raising was completed last Friday.
Nothing going on ahead of the AFL and NRL preliminary finals…
- Babcock & Brown Capital (BCM) announced this morning their Irish telecommunications division Eircom Group was awarded a 6-10 year contract worth around EUR100m to build workplace infrastructure for the Northern Ireland civil service. It will involve covering all the voice, video and data applications for all 11 Northern Ireland government departments. BCM has been in the good books lately with brokers, UBS Warburg had a buy recommendation on them yesterday with a 630c target price. BCM up 1c today to 421c.
- PMP have acquired Time Printers from Singapore’s Times Publishing for around $80m in cash and shares. They will raise $65m via a share placement and offer 39 million new PMP shares to Times Publishing shareholders at an issue price of 165c, cash will care of the remaining $15m. The deal is expected to be completed by November 15. PMP up 1.5c to 150c.
UBS Warburg maintained their “buy” recommendation on Sigma Pharmaceuticals (SIP) despite cutting their target price by 17% to 216c from 260c on the back their poor profit result yesterday. They see limited downside risk from here.
- Wouldn’t mind being one of Andrew Forrest’s (CEO of Fortescue Metals) relatives, page 3 of the AFR reports that he will be giving $80m away to a children’s charity and that he “will also give 520,000 shares – worth around $22 million at yesterday’s price – to extended family members. FMG down 111c to 4149c.
- Nickel stocks taking a breather today after the nickel price yesterday had its biggest one day jump in 19 years. The World Bureau of Metals Statistics has reported that nickel demand had outdone supply by 13,000 tonnes in the first 6 months of 2007. Sally Malay (SMY) down 2c to 458c and Jubilee Mines (JBM) down 12c to 1716c.
- Publishing & Broadcasting (PBL) up another 22c to 1897c after putting on 31c yesterday, the Governor of Massachusetts announced plans to issue three class-3 casino licenses for the US the state. Talk is that PBL and a partner are likely to have a crack.
- Macquarie research have run the numbers of Fairfax (FXJ) and say if they put the Australian digital business of FXJ on a Seek-type multiple, and used a market-based valuation multiple for the rest of the FXJ business, FXJ would need to rise 60c to reach full value. FXJ down 1c to 452c.
- Leighton Holdings (LEI) closed 7% higher yesterday on no announcement – they announced a tiny US$34m Philippines contract this morning.
- The Euro passed $1.40 for the first time since being introduced in 1999.
- Austal (ASB) is the only stock that goes ex dividend today.
The following stocks need to rise by the following amounts to regain their year highs – Macquarie Bank 28%, Babcock & Brown 43%, the ASX 200 1.0%, NAB 18%, Paladin 50%, Zinifex 27%, Kagara Zinc 32%, Orica 24%, Telstra 15%.
We have a list in the MARCUS TODAY newsletter today showing all the numbers on the ASX 200 and how far the stocks have to rise to recover their year highs. You may thing you’ve missed the bottom, and you have, but there is still plenty of upside if we are about to embark on the next up-leg of the Bull market. We will have the usual lists in the MARCUS TODAY newsletter today – cheapest stocks in the ASX 200 and the highest gross yields. Get a Free Trial of the MARCUS TODAY newsletter and subscribe before Monday at www.marcustoday.com.au and get in the draw to win two iPods and access to a promotional price.
Have a good weekend. Take the rest of the day off … there’s nothing going on.
THE MORNING MARKET REPORT is provided by the MARCUS TODAY daily stockmarket newsletter. You can subscribe for a free five-day trial here.