The market is up 30. It was up 69 at its peak and down 6 at its low. The Futures suggested a 32 point rise this morning.

The Dow closed up 41. It was down 73 at its worst and up 136 at its best. The main news was Bond insurer Ambac falling 18.8% (it is already down 87% on the year high) on the announcement of a disappointing rescue plan – After a week of anticipation it was just a share issue, not a bailout. The market was hoping a consortium of 8 banks was going to put $3bn behind the company, instead the company announced plans to raise $1.5bn through a $1bn common share issue and a $500m equity unit issue, enough to retain their AAA Rating if they get it away (although there are comments that this is not a AAA rated industry any more, whatever the Rating agencies claim). They pulled a $1bn share issue in January after their share price collapsed. If Ambac loses its credit rating it will lower prices of the $556bn of municipal bonds on its books. There are $2.4 trillion of municipal bonds on AAA Rated bond insurer books. Credit Default Swap (CDS) yields rose 10bp. MBIA down 6.2%. Comment from the Goldman Sachs CEO on the credit crisis: “We’re not in the ninth inning by any means, we’re maybe two-thirds through, a half to two-thirds. I think it will consume our attention for the rest of this year” The Goldmans CEO was paid a bonus of $67.9m in 2007. There is a 50/50 chance of a 50bp or 75bp interest rate cut at the next FOMC Meeting on March 18th.

  • Both BHP and RIO up in ADR form overnight, 3.83% and 2.9% respectively. BHP up 48c to 3951c and RIO up 192c to 13567c.
  • Metals did well overnight. Copper up 3.1% (22 month high), Nickel up 1.7% and Zinc up 1.2%. Aluminium closed up 2.7%.
  • Oil price up a big $4.73 or 4.5% to $104.45 after OPEC decided to leave output targets unchanged after its meeting. The Energy Information Administration also released data indicating US crude inventories had fallen.
  • Gold up 2.2% or $22.20 to $988.50. $1,000 here we come.
  • Bonds down with the 10 year yield up to 3.69%.

The ASX 200 is down 6.6% or 380 points in the last 5 trading sessions. Banks have been the main contributor.

  • Allco Finance Group (AFG) has sold its unitholdings in Rubicon America Trust, Rubicon Europe Trust and Rubicon Japan Trust. Allco still holds 15,076 units in Rubicon Japan, 8,334 units in Rubicon Europe and 5.8m units in Rubicon America and said that $443,474 is still outstanding on the Credit Suisse margin loan, and Credit Suisse intends to sell the necessary number of units to clear this debt. AFG up 16% to 61c. It was up 33% yesterday on the news that John Kinghorn (RAMS Home Loans fame) bought stock (he has lost around $45m on his original purchase of a stake in the company). Still, he sold RAMS to his shareholders at 250c, at least that was smart. It is now 14.5c and his shareholders have worn the loss that created his $600m plus gain.
  • St. George Bank (SGB) has reiterated its EPS guidance of 10% growth for the financial year. St. George (SGB) down 23% in the past 5 days. According to Were’s, it is currently trading on a FY09E PER of 8.2x and on a yield of 9.4%. SGB up 2.8% to 2215.
  • Nufarm has raised $200m selling shares to institutional investors at 1510c each, to fund its two acquisitions announced yesterday. The issue price represents a 6.2% discount to its last trading price. NUF down 4.6% to 1536c.
  • Incitec Pivot (IPL) has released a trading update this morning. It expects FY08 EBIT to be between $700m and $730m, up 135% from last year. The stock has been a phenomenal performer, up 48% in the past Q compared to a 19% fall in the All Ords. IPL up 5.1% to 16775c.
  • According to the Sydney Morning Herald, the NSW government could sell its electricity assets in a public share sale to form two listed companies. Not good news for AGL Energy and Origin who expected to bid for the assets in a trade sale. ORG down 3c to 890c and AGK up 13c to 1044c.
  • Brockman Resources (BRM) had a massive day yesterday – up 187c (165%) to 300c – after it announced a major upgrade to resource estimates at its Marillana iron ore project. BRM not doing so well today, down 20% to 238c.
  • QBE Insurance (QBE) down 31% in the past 5 days. Were’s say the stock doesn’t have any serious credit issues or profit problems and is a BUY. QBE up 3.7% to 2105c.
  • Goldman Sachs JBWere has added Wesfarmers (WES) to its BUY CONVICTION. They have a 4765c target price, 22% above current share price. WES down 80c to 3817c. It has had a bit of a coal priced inspired rally recently.

In the MARCUS TODAY newsletter today we have all the research on ABC Learning’s latest transaction and the Just Group profit result. For a FREE TRIAL OF THE MARCUS TODAY NEWSLETTER click here.

Peter Fray

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