The market is up 58. The SFE Futures suggested a 45 point fall in the market this morning.

Dow closed down 45. It was down 226 at its worst and up 1 at its best. Bernanke spoke about the housing market in one of the worst hit States – Florida – where foreclosures are up 158% in the last year and house prices in Miami are down 17.5%…the most of any US City – he talked about the housing crisis getting worse and appealed to lenders to give defaulting borrowers some slack. Main market fall kicked off by a profit downgrade from Intel including margin falls in January and reduced chip prices. A late rally came on the back of a CNBC Report that the bail out of Bond insurer Ambac was still progressing. Fed Governor Donald Kohn talked about financial companies facing challenging conditions and that there has been a substantial deterioration in asset quality and earnings that will lead to continued write-downs. Google hit a 52 week low. Now down 46% from the top.

Both BHP and RIO down in ADR form overnight, 1.82% and 1.1% respectively. Metals all down overnight – Copper down 2%, Nickel down 0.5% and Zinc down 1.8%. Aluminium down 0.5%. Oil price down $2.70 to $99.70 – An Energy Department official told a Senate hearing that supply and demand would indicate a price of about $90 a barrel. Gold down $17.90. Bonds down with the 10 year yield at 3.62%.

The RBA statement yesterday is being interpreted as backing away from last month’s call for a 50bp rise – in other words the chance of further rate rises has diminished. That impact is evident in the fall in the A$ yesterday. The main line perhaps was this one in the RBA statement yesterday – “the overall tightening in financial conditions since the middle of 2007 is substantial”.

Oxiana down 9.4% yesterday and Zinifex 10.5%It is hard to understand why considering the almost universal enthusiasm for the deal from brokers. Seems there is disappointment that Owen Hegarty is not going to be at the helm of the new group. ABN described the merger as “vision and value, not earnings driven”. Were’s say BUY OXR and that the merger makes sense. Speculation about who Oxiana and Zinifex (or should that be Ziniana or Oxifex) will bid for next. Names mentioned so far include Equinox (EQN), Kagara (KZL – up 5% yesterday and now the biggest zinc stock), Albidon (ALB), Independence Group (IGO), Pan Australian (PNA) and First Quantum (Canadian listed).

Banks recovering today. In the news…

  • Nufarm (NUF) announced two acquisitions in the UK and US for total cost of $236m. NUF unchanged at 1610c.
  • Just Group (JST) – RESULTS IN LINE – announced a 3% increase in 1H profit to $40.98m compared to $39.7m last year. Analysts expected $40.8m. JST up 8c to 355c.
  • Credit Suisse ups its target price’s on Woodside Petroleum (WPL) to 5400c from 5800c, Santos (STO) to 1400c from 1250c and Oil Search (OSH) to 700c from 650c after raising 2008 Nymex oil forecast to $90 from $70. WPL
  • Citigroup has cut its target price on Asciano (AIO) by 46% to 501c from 940c after its profit result and has removed its expectations that the company might receive entry into QLD’s coal haulage and other growth options. AIO down another 7.8% to 368c.
  • National Australia Bank (NAB) is has raised $135m via a sale of September 2009 floating-rate notes. NAB up 4% to 2858c.
  • Macquarie Group (MQG) announced it would “substantially” cut back its Australian mortgage services due to increased costs. MQG up 2.2% to 5185c.
  • Babcock & Brown Infrastructure Group (BBI) wants a 12 months extension to its option to buy the remaining 49% of a Western Australian rail infrastructure business. it is also considering selling 6% of its stake in the Natural Gas Pipe Line in America. BBI down 2c to 105c.
  • Goldman Sachs JBWere’s has upped its iron ore and crude forecasts. Expect 2009-10 iron ore contract price to increase by 20% and expects Nymex average crude for prices to sit around US$92.78 in 2008. Were’s has also increased its 2008 average gold forecast to US$930/oz from US$866.
  • Ausenco (AAX) announced the acquisition of resources sector engineering company Sandwell International and added it has agreed to terms to buy Vector Engineering Inc. for a combined total of $117m. AAX down 4% to 1244c.
  • Bravura Solutions (BVA) has extended its contract with Hunter Hall Investment Management for another 3 years. BVA up 5c to 150c.
  • Queensland Gas (QGC) has announced a 1H profit of $22.1m. QGC down 4c to 421c.
  • Progen Pharmaceuticals (PGL) has expanded its board of directors and named Mal Eutick as non-executive Chairman. PGL down 1c to 147c.
  • AGL Energy (AGK) announced it has acquired the development right to a third wind farm site in South Australia at Mt Bryan. AGK up 9c to 1072c.
  • Growth in services sector activity slowed last month. The Performance of Services Index (PSI) fell 1.7 points to 53.2, but remains above the key 50 level separating expansion from contraction.
  • Australian economic growth came in slower-than-expected in the 4th Q, +0.6% from the previous Q and is up 3.9% on the year. Economists expected +0.8% for the Q.

In the MARCUS TODAY newsletter today we have an article called Alloy Wheels and the fundamental flaw in most or our characters…the need to impress. We also have all the usual PEs and YIELDS on the ASX 200 and a lot more of the stories and research and ideas doing the rounds. For a FREE TRIAL OF THE MARCUS TODAY NEWSLETTER click here.

Peter Fray

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