The market is up 39 and doing better than the 38 point fall the SFE Futures had predicted this morning.

The Dow Jones closed down 55 overnight – Moving in a 181 point range, Wall Street closed down for the fourth consecutive session and finished below 13,000 for the first time since August on concerns that the US economy will continue to struggle and that the credit crunch is far from over. The financial sector performed well, Citigroup up 4.7%, despite Countrywide Financial Corp warning it could be “severely” limited if its credit rating dropped into junk status, and according to the Times of London, HSBC Holdings looks like being the next major financial institution to write down losses from exposure to the debt markets. But the big news overnight was the 59% fall in E*Trade’s shares after announcing the value of its mortgage-backed securities had fallen significantly and that it will need to take bigger than expected write downs in the 4Q. A Citigroup analyst told investors to sell the stock as the company may go bankrupt. The NASDAQ had another rough session finishing 1.7% lower; Google fell 4.8% and has now lost 15% in the past 4 sessions. Microsoft fell for a 6th straight day after Merrill Lynch & Co. cut their recommendation on the stock to “neutral” from “buy” saying demand for their products may slow, particularly from financial companies.

Resources struggling today, Big falls in BHP and RIO in the US – down 6.34% and 8.88% although the falls are more muted in our market this morning. Resources fell in the US as the US$ rallied. BHP down 30c today to 4140c and RIO down 117c to 13855c. Metals all down overnight. Zinc down 3.6%, Aluminium down 1.6% and Copper 1.1%. Nickel down 0.4%. Zinifex down 44c to 1436c. Zinifex say they will appoint a new CEO by the end of the year with the market thinking the ex CEO of WMC – Andrew Michelmore – is a likely appointment. Oil price down $1.96 to $94.40 after Saudi Arabia’s oil minister, Ali Naimi, said production will be discussed when OPEC meets in Abu Dhabi next month, leaving open the possibility of a boost in production. Woodside down 9c to 5200c. Gold fell for once, down $27 or 3.3%. Newcrest down 61c to 3357c. A$ down 3.6% against the US$ to $87.88. Its was $93.20 yesterday. The RBA statement yesterday also took something off expectations for a December rate rise in Australia.

Lots of press about BHP’s announcement yesterday trying to force the RIO board to the negotiating table by appealing to their shareholders to consider the 3 for 1 proposal. BHP want friendly discussions. They are suggesting $3.7bn in quantifiable synergies from a merger and propose a $30bn buyback if the deal is done. RIO has rejected the proposal and said there is no plan to begin friendly talks. Marius Kloppers is quite aggressively pursuing the deal….seen as an example of the way he is going to run the company – aggressively taking advantage of the current cycle. Kloppers says he will explain the benefits of the deal to Chinese customers – they will get more iron ore delivered more efficiently.

A little quieter today…

  • Macquarie Group (MQG) have announced a better than expected 45% increase in 1H earnings but the outlook statement is a bit soft and the share price is down. Cash earnings for H2 expected to be at least equal to last year (with less asset sales) – hardly a bumper expectation compared to some forecasts for 20% growth. May see some downgrades in the research tomorrow. The lower expectation was based on less favourable equity market conditions as well as lower asset sales. MQG down 4.1% to 7865c.
  • Publishing & Broadcasting announced this morning their JV with Macquarie Bank, New World Gaming, has received approval from regulators in British Columbia and Alberta. They expect the bid to be completed by November 14. PBL up 8c to 1925c.
  • Goldman Sachs JBWere upped their FY08 earnings forecast for Computershare (CPU) by 12% after the company upgraded its earnings guidance yesterday. They now expect to grow earnings by “greater than 30%”. Were’s maintained their Buy recommendation and upped their target price to 1100c from 1060c. CPU down 5c to 975c.
  • Oxiana (OXR) tells us the suspension of construction at its Prominent Hill project in South Australia isn’t expected to delay the copper-gold development. They want to vary the route of the 180km power line that will run to the remote project from its power source at Olympic Dam. OXR down 6c to 400c.
  • Leighton’s subsidiary John Holland has been awarded two contracts worth $117m for the terminal expansion at Melbourne Airport and is also the preferred contractor for a third contract worth around $84m. LEI up 3% today to 5974c, the stock is up 175% in the past 12 months.
  • Straits Resources (SRL) said initial drilling at their Monza prospect in NSW has returned high grade copper and gold intersections. SRL down 19c to 606c.
  • Uranium stocks getting smashed again – both Paladin and ERA down another 5% today. Still not sure whats driving it – no signs of trouble on the uranium price front as far as we can see…just profit taking.
  • IAG share price has hardly moved on the back of its AGM today, down 1c to 445c.
  • Rupert Murdoch tells the Herald Sun that the media sector continues to excite him and that he has no plans of slowing down.
  • Banks outperforming, NAB up 1% to 4362c, ANZ up 1.1% to 2771c, WBC up 1.1% to 2830c and CBA up 0.7% to 5977c.
  • Were’s say yesterday’s November Statement on Monetary Policy incorporated modest changes to the RBA’s forecasts. Were’s expects one more rate rise of 25bp in February 2008 but believe the RBA will leave rates alone in December, despite a rise being a “distinct possibility”.
  • CSR went 6c ex-dividend today.

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