The market is in a good mood – up 50. The SFE Futures suggested a 41 point rise in the market this morning.

The Dow Jones closed down 3 overnight – It moved in a 194 point range and finished slightly lower on the back of disappointing earnings and new home sales numbers. The Dow staged a recovery for the second straight day closing just about unchanged after being down as much as 127 after the Commerce Department said sales of new homes increased by a lower-than-expected 4.8% in September. Bond insurer BIA Inc. closed down 15% – the most in 20 years – it announced a $36.6m loss after writing down $342m worth of securities it guarantees and said it will stop buying back its own shares because it needs to conserve capital. Motorola on the other hand had a positive session, up 4% despite announcing a huge 94% fall in 3Q earnings after losing market share to rivals, management are forecasting 4Q earnings to grow 40% higher than what analysts had predicted. The NASDAQ lost nearly 1% despite Microsoft’s earnings result coming in better-than-expected. 1Q profit increased 23% to $4.29bn after sales grew 27% to $13.8bn, indicating a profit margin of 31%.

Resources outperforming today – up 1.8% compared to a 0.8% rise in the overall market. The big boys are leading the charge, BHP up 82c to 4556c and RIO up 264c or 2.5% to 10707c. Metals did well overnight, both Copper and Zinc up 1%, Nickel up 2.7% and Aluminum up 0.7%. Zinifex up 29c to 1813c. UBS Warburg maintained their Neutral recommendation on ZFX and 2000c target price despite the rest of the market being bearish on zinc. Oil price closed in record territory, up $3.79 to $92.09 on news that OPEC won’t announce any new output quotas when it meets next month. Woodside up 105c to 5365c. Gold up $5.40. Newcrest finishing off the week extremely well, up 114c or 3.9% to 3025c on the back of the gold price hitting a 28 year high of US$772. Some market commentators are suggesting it wont be long before it reaches $US1000. Pan Australia (PNA) also doing well, up 2c to 98c – Were’s has a 127c target price on the stock.

Lots going on to finish off the week…

  • Downgrades all over the place today for ANZ Banking Group (ANZ) on the back of yesterday’s earnings result. Although the numbers looked OK, no earnings guidance was given by new CEO Michael Smith. Both Citigroup and ABN AMRO cut their recommendations to Hold from Buy, labelling it “disappointing”, telling investors the bank will underperform its peers. ANZ down another 11c today to 2985c after losing 3.7% of its market value yesterday.
  • Austar’s (AUN) profit result is out – Good – earning up 23% to $26.1m from $21.3m a year ago. Revenue increased to $144.8m representing a profit margin of 18%. They added 18,959 new subscribers in the past quarter, helping their subscriber base rise by 11% for the year so far. AUN up 2c to 155c, there is still talk that a bid is coming their way.
  • Consolidated Minerals wants to know who owns the mysterious 17% stake in their company and have taken the matter to the Takeovers Panel. Palmary Enterprises say they know nothing about it. CSM up 7c to 487c.
  • Santos has announced this morning it is expanding into Bangladesh. They have bought assets, including a 37.5% interest in the producing Sangu gas field Cairn Energy (CNE). STO down 49c to 1450c. JP Morgan cut their recommendation to Underweight after it announced a scale-back of the Copper Oil program and unexpected tax payments. Were’s maintained their SELL recommendation and 1280c target price.
  • IAG getting hammered – down 4% to 470c – they cut their written premium guidance to 7%-9% from 10%-12% previously, it is the U.K. Advantage and Australian commercial businesses that are struggling. IAG’s share price has been disappointing of late, down 7% in the past quarter.
  • Paladin Resources (PDN) tell us they’re on track to deliver the forecast 2.8m pounds of uranium in 2008 after ramping-up its Langer Heinrich project. PDN up 7c to 717c.
  • On the diary tonight we have more earnings results in the US and the consumer sentiment survey
  • Companies going ex dividend today include Belmont Holdings, Atlas Group Holdings, CTI logistics and London City Equities.

THE MORNING MARKET REPORT is provided by the MARCUS TODAY daily stockmarket newsletter. You can subscribe for a free five-day trial here.

Peter Fray

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