The market is up 25. Not a lot of volatility today…for a change…”just” a 58 point range so far. The Futures suggested a 4 point gain in the market this morning.

Dow Jones was up 21 overnight – It was down 194 at its worst (on the open) and up 125 at its best (just before the close). A Memorable St Patrick’s Day. We went to bed last night fearing a potential Crash on Wall St after the $2 bail out of Bear Stearns. The Dow Futures suggested a 240 point fall. The Dow opened down 194 and that was the worst of it, somehow managing to crawl into positive territory by the close.

Not so lucky the NASDAQ down 1.6%, the S&P 500 down 0.9%. BHP and RIO slam dunked in the wake of the commodity price fall the CRB index down 4.6% – BHP down 5.37% in ADR form and RIO down a huge 9.58%. Down 7.86% and 8.43% in the UK. Anglo American down 5.97%. Xstrata down 5.54%. Metal prices belted. The main CNBC headline all night was “Bear Stearns – Who’s next?” The Fed’s action to ease credit markets was the other feature (dropping its emergency lending rate 25bp) and its pledges to do whatever is necessary to stabilize financial markets. Their desperation has prompted fears that they are not up to it and that if they were really in control they would not be having to react. One market report quotes a fund manager saying “Some people have accused them of whistling past the graveyard – I don’t think they even know where the graveyard is”. JP Morgan up 10.3% on its purchase of Bear Stearns. Bear Stearns down 83.97% on the bid from JP Morgan. Man Financial (MF Global) was down 78% at one point last night and closed down 63% on liquidity fears.

  • Resources down 2.4% led by the big boys – BHP down 3.7% to 3613c and RIO down 3.2% to 12293c.
  • Metals had a horrid night – Nickel down a big 10%, Zinc down 5% and Aluminium 4.7%. Copper down 3.8%.
  • Oil price down $4.29 to $105.74 after reaching a high of $111.80. WPL up 3c to 5310.
  • Gold up $3.10. Newcrest down 4% to 3717c.

Making the news today…

  • Babcock & Brown – down 10% yesterday – on concerns about the market cap review clause in the company’s loan facility which suggests the hedge funds will target a 1020c share price. They is talk they will soon announce a revised and much lower market cap trigger level after negotiation with the 20 banks. A fall in the market cap triggers a review clause (banks can renegotiate terms) not a breach of a loan covenant allowing them to ask for their money back. They have also announced $398m worth of European asset sales this morning…above book value and JB Were suggests they will effect other asset sales to have $1.5bn of cash on the balance sheet by year end. BNB up 2.5% to 1256c. They are down 36% in three weeks.
  • WA News (WAN) Chairman Peter Mansell continues to label Kerry Stoke’s attempt to take control of the board as “opportunistic” and will release March-Q results 2 weeks earlier than expected. WAN up 24c to 1024c.
  • Talk is that Toll Holdings (TOL) is having difficulties selling its 62.7% stake in Virgin Blue. Despite that VBA is up over 5% first thing. TOL up 7c to 900c.
  • Key Petroleum (KEY) having a big day yesterday – up 79% at one stage – after it struck gas off the east coast of Tanzania. KEY up another 50% today to 18c.
  • Lend Lease (LLC) announced it has bought Craigieburn town center for $73.5m from Valad Property Group (VPG). The 65-hectare site is adjacent to LLC’s Craigieburn residential development. LLC up 19c to 1210c.
  • Goodman Group (GMG) announced its Tokyo listed associate J-REP has acquired a portfolio of 14 Japanese logistics properties to gain a greater market share. GMG up 16c to 377c.
  • Leighton Holdings (LEI) announced Cheung Kong Infrastructure Holdings has written down its 19% stake in Connector Motorways, LEI has an 11.1% stake worth around $60m. They reiterated earnings guidance for a 30% increase in earnings this year on last. LEI down 89c to 4161c.
  • Bell Financial (BFG) is not going ahead with the Tricom acquisition. BFG up 22c to 130c.
  • Macquarie Bank has initiated coverage on Straights Resources with an OUTPERFORM recommendation and 900c target price which is well above the current share price of 563c – hasn’t done much for the price this morning which is down with the rest of the resources. SRL down 22c to 541c.
  • According to Were’s, Qantas are trading at 1.3x book value, 6.7x PER and has a 10% yield for 2008. (It traded at 1x book value during the Asian crisis). The stock is down 22% in 12 days and has hit 18 month lows. QAN up 4c to 375c.
  • JP Morgan continues to advise investors to stay away from the banking sector…for now. Banks doing OK today. CBA up 2.3% to 3816c, NAB up 1.7% to 2731c, ANZ up 34c to 2088c and WBC down 3c to 2228c.
  • 193 stocks hit fresh yearly lows yesterday; only 4 bucked the trend and registered 52 week highs.

The FOMC Meeting tonight is expected to cut rates by at least 50bp, probably 75bp and possibly 100bp.

The RBA Minutes of the last RBA Meeting are out – click here – not too much in it – says the March rate rise was necessary to dampen down inflation fears and that they acknowledge tighter conditions in the credit markets has driven funding costs higher. Perhaps the one take is that they declare a “flexibility to respond” to the credit market conditions which suggests they are prepared not to raise interest rates again depending on international credit markets.

In the MARCUS TODAY newsletter today we 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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