The market is up 56. The SFE Futures suggested a 71 point rise in the market this morning.

WALL ST UP 189 – Wall St. moved in a 243 point range and finished the session nearly 200 points higher after the S&P reaffirmed AAA credit ratings for the largest bond insurers, MBIA (up 16%) and Ambac Financial Group (up 19.7%). Financial stocks could have performed better on the back of the news that Standard & Poor considers the bond issuers’ subprime mortgage issues as manageable. The financial sector struggled to achieve any meaningful gains after Goldman Sachs said it expects several more multibillion-dollar write-downs across the sector, from Citigroup in particular. The ratings agency also cut Capital Assurance and Financial Assurance to A from AAA and also Financial Guaranty Insurance to A from AA. In other news, Visa Inc. announced its IPO could raise up to $19bn, making it the largest in US history, (MasterCard has risen fivefold since going public). Take-Two Interactive Software Inc. closed up 54% after Electronic Arts Inc (down 5%) made a $2bn takeover offer.

  • Sales of existing homes fell for the 6th straight month in January (down 0.4%), falling to the slowest sales pace on record.
  • According to the National Association of Realtors, the median price of a home sold in January fell by 4.6% from last year to $201,100.

The NASDAQ up just over 1% – some analysts are suggesting the $40bn bid for Yahoo Inc by Microsoft is a lot of money for Microsoft that could be used for other purposes.

According to Credit Suisse, the market is pricing in a 91% chance the RBA will increase rates by another 25bps at next week’s meeting. Interest rates currently at 7.0%.

  • Main story of the day is ABC Learning getting belted (down 65%) on results down 43% and almost half some expectations. They say they will make it up in H2 and they retain guidance but the market not impressed. There are also concerns that Eddy Grove s with 3.5% of the company will be forced into margin call and have to sell. There were suggestions he would have to sell if the price fell below 400c. It is now 133c. They have $1.7bn in debt after a massive acquisition spree. One bank thought to have a $600m exposure. Banks doing OK today thought.
  • Allco Finance Group down another 30%. Ow. Seems they are at the mercy of the banks who could choose to call in loans and send them to the wall. Also concerns about the prices they will get for assets in a fire sale. UBS Warburg has suspended research coverage on the stock today.
  • Zinifex research seen today includes one BUY, one UNDERPERFORM, one NEUTRAL and one HOLD.
  • Goldman Sachs JB Were has a SELL on Bluescope Steel today after the results yesterday.

Lots of result today…

  • Woolworths (WOW) – ABOVE EXPECTATIONS – 1H NPAT up 28% to $891.3m. All divisions performed impressively. Revenue up 8.6% to $23.9bn. Confirmed FY forecast of a 19-23% increase in net profit. WOW up 3.8% to 3010c.
  • QBE Insurance (QBE) – BELOW CONSENSUS – 30% increase in FY profit to $1.925bn. Analysts expected $2.037bn. Hits 14 month low on back of result. Goldman Sachs JB Were says the selling is overdone. Down 11.6% to 2534c.
  • Sonic Healthcare (SHL) – EBIT NUMBER BELOW EXPECTATIONS – announced a 21% increase in 1H profit to $113.3m, analysts had expected $114m. SHL down 2.6% to 1454c.
  • Aristocrat (ALL) – IN LINE – FY profit up 3.4% to $247.2m. Declared final divi of 20c. ALL up 7.9% to 1068c.
  • Goodman Fielder (GFF) – BIT BELOW – 7% fall in NPAT to $94.6m, Were’s expected $97.9m. GFF up 2c to 183c.
  • Flight Centre (FLT) – GUIDANCE LIFTED – 1H NPAT of $62.6m, up from $52.7m. FLT up 46c to 2855c.
  • Austar United (AUN) – SOLID – FY profit down 63% to $77.3m. Last year’s result included a tax benefit. AUN down 1c to 146c.
  • Babcock & Brown Infrastructure Group (BBI) – OK – distribution guidance retained. BBI up 4c to 131c.
  • Companies going ex-divi include: AMC 17c, BNB 33c, CPU 10c, FGL 12c, FXJ 10c, STO 20c and TAH 47c.

In the MARCUS TODAY newsletter today we have all the research post results the day before and continued coverage of the results season. Only three more days of results until sanity returns.

For a FREE TRIAL OF THE MARCUS TODAY NEWSLETTER click here

Peter Fray

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