The market is down 59. The SFE Futures suggested a 32 point fall in the market this morning.

The Dow Jones was down 79 overnight – It moved in a 91 point range and finished lower on the back weaker-than-expected economic data and broker downgrades in tech stocks. The Institute of Supply Management reported that the service sector expanded at a slower rate in September than in August and has hit a 7 month low. The Mortgage Bankers Association said mortgage application volumes fell 2.7% last week. Intel Corp. and Advanced Micro Devices closed down after Morgan Stanley slapped an “sell” recommendation on both stocks, and Micron Technology Inc. fell the most in year after announcing a third straight quarterly loss. Exxon Mobil and ConocoPhillips dropped after another fall in the oil price and Alcoa Inc. finished 3% lower after announcing a lower-than-expected 3Q profit due to lower aluminium prices and rising costs. NASDAQ down 0.6%, Morgan Stanley also took aim at Nvidia, initiating coverage with an “underweight” recommendation.

Resources underperforming today…BHP down 111c to 4409c and RIO down 233c to 10764c. Metals mostly up overnight, Nickel up 2.6%, Copper up 1.7%, Zinc up 1.4% and Aluminium down 0.2%. Zinifex up 42c to 1851c. They are disregarding recent market volatility and are proceeding with the float of their smelting assets in Brussels towards the end of the year. Oil price down 3c to $79.97 for the fourth straight day after the government reported an unexpected rise in US inventories, +1.2m barrels to 321.8m compared to the +400,000 expected. Woodside down 60c to 5102c. Gold down 60c. Newcrest up 65c to 2836c.

  • According to the AFR, Harvey Norman (HVN) is considering acquiring NZ’s largest consumer electronics chain, Noel Leeming Group for around $330m. Talk is that Gresham Private Equity, Noel Leeming’s owner, has already had chats with both Woolworths (WOW) and JB Hi-Fi (JBH), JBH’s CEO Richard Uechtritz has denied this. If true, HVN might have a few regulatory issues considering they’re already the second biggest electronics retailer in NZ. HVN up 11% in the month. HVN down 19c to 590c.
  • The class action against Aristocrat Leisure (ALL) starts today in Sydney. “The class action alleges Aristocrat misled shareholders by misstating its 2001 profits, misstating its 2002 half year profits, and by breaching its obligations to keep shareholders informed in late 2002 –early 2003 before announcing earnings downgrades that wiped $A2 billion from the company’s value. The action claims damages of more than $200 million for losses suffered when the share price collapsed and shareholders sold their stock”. ALL down 5c to 1360c.
  • Casinos sector weak in the US after Morgan Stanley said preliminary September Macau gaming revenue is below expectations. The PBL Melco Entertainment JV fell 6.03%. Not good news for PBL this morning. PBL down 26c to 1989c.
  • There is also a report in the AFR suggesting Australian Environment Minister Malcolm Turnbull has approved Gunns (GNS) planned $1.7bn takeover of the Tamar Valley pulp mill Tasmania subject to environmental conditions. GNS currently in a trading halt pending an announcement.
  • ABN AMRO upped their recommendation on Soul Pattinson (SOL) to BUY and their target price to 1087c from 955c after incorporating current market values of their listed investments. They see potential risks from investment performance, stock market and interest rates. SOL unchanged at 924c.
  • Profit warning – ABB Grain (ABB) have cut their estimated net profit by more than half to $5m-$8m from $16m-$19. “Global influences, including government decisions on grain stocks and pricing, and uncertainty with current crop conditions in Australia are causing extreme volatility on Australian and world grain markets”. Not good news for the likes of Graincorp (GNC) and other rural stocks. ABB down 45c or 5.9% to 718c. GNC down 14c to 926c.
  • The Australian Industry Group-Commonwealth Bank Performance of Services said the services sector grew at a quicker rate in September than in August.
  • Gold touched an intra-day high of $US736.43 an ounce but still ended the session lower.
  • Companies going ex-dividend today include: APR, ASZ, FAT, KME, NCK, ORL, PSH, VGH.

We have an article in the Marcus Today newsletter today about sophisticated investors. What are they. Are you one. How do you become one and so get offered things other people don’t get offered. Assuming you want them, which you might not.

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