The market is down 6 – we were up around 60 earlier in the session – the SFE Futures suggested a 65 point rise in the market this morning.

WALL ST UP 133 – Wall St. moved in a 228 point range and closed higher for the second consecutive session after Warren Buffett announced Berkshire Hathaway would assume the risk of $800bn worth of municipal bonds guaranteed by MBIA Inc., Ambac Financial Group and FGIC Corp, in an attempt to gain 33% of the debt insurance market. Berkshire will put up $5bn as capital for the plan and will offer to insure the municipal debt for 1.5 times the premium charged by the bond insurers to take on the guarantee. The Dow Jones was up over 200 points earlier in the session on the back of the news before losing some of the gains – 29 of the its 30 components closed up. Financials were also assisted by the Bush administration announcing a program – “Project Lifeline” – offering to assist struggling homeowners with all types of mortgages threatened with foreclosure. In other news, Credit Suisse announced it had reduced its exposure to subprime mortgage debt to 1.6bn francs from 3.9bn, General Motors said it lost $722m in the 4Q, and the Treasury Department said there was a budget surplus in January but the deficit still totals $87.7bn so far this budget year which started Oct 1 last year. The NASDAQ closed down a touch – Legg Mason Inc., Yahoo’s second largest shareholder, said Microsoft will have to up its $44.6bn offer in order for them to consider selling.

In the news today…

  • CBA results – Cash earnings up 3.9% some 5% below expectations – NPAT up 8.2% to $2.37bn versus consensus of $2.48bn and some expecting over $2.5bn. Interim dividend of 113c (up 6%) is bottom of the consensus range of 114-120c. CBA down 217c or 4.4% to 4722c. 52 week low.
  • RIO results at 5pm today. It has sold its interest in Green Creek Mine for US$750m. RIO up 200c to 12980c. It was up 5% yesterday. What does the market think it knows that we don’t.
  • Western Areas (WSA) has put out a presentation including 5 year targets. WSA up 8c to 505c.
  • Allco Finance Group (AFG) still in trading halt – talk of Macquarie Group (MQG) buying the company or backing an MBO – no comment from Macquarie or AFG – results are still due on Friday. AFG last traded at 305c and MQG down 96c to 5845c.
  • Crane Group’s (CRG) 1H profit up 13.4% – better than expected – maintain FY guidance. CRG up 5.3% or 80c to 1585c.
  • Boral’s (BLD) 1H profit fell 10% to $132m – result better than the $121.5m analysts expected. BLD up 34c or 6.1% to 594c.
  • Coca-Cola Amatil (CCL) announced a FY profit of $367.3m, up 17% from $313.6m last year. CCL up 15c to 894c.
  • Computershare (CPU) said 1H profit increased to $US154.9m, up 46% from US$119.3m last year. CPU up 54c to 810c.
  • Sino Gold (SGX) announces ore reserves at its White Mountain in China up 81.5% to 6.5m tons. SGX up 17c to 755c.
  • Primary Health (PRY) is in a trading pending an announcement. PRY will raise $1.23 billion in a rights issue at 540c a share. PRY last traded at 1022c.
  • Westpac’s index of consumer sentiment had fallen to 97.4 points this month from 103.1 points in January. The index is now 12.6% below its level a year ago, and 15.5% below its 2007 average.
  • A lot of research on Cochlear out today. They fell over 9% on results yesterday. The consensus includes downgraded earnings and target prices. The suggestion by some brokers that the sell off was overdone has fallen on deaf ears. Down another 77c to 5818c today. Similar story with JB Hi-Fi that fell 8% on good results yesterday. Down another 2.9% today. Seems the high PE stocks are high risk even when results are OK.
  • AED stops production at its Puffin oil field due to storms. AED down 11c to 104c.

In the MARCUS TODAY newsletter today we have an updated Results Diary, a good look at the research post yesterday’s results and a more detailed opinion and description after CBA’s results.

For a FREE TRIAL OF THE MARCUS TODAY NEWSLETTER click here.

Peter Fray

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