The market is finishing off the week in a “comfortable” mood – up 19. The SFE Futures suggested a 14 point rise in the market this morning. It’s a bit like Christmas Day in the trenches. The OPES war has exhausted us all and football has broken out.
Dow Jones index up 20. It was down 78 at its lowest and up 70 at it highest as the market took confidence from Bernanke’s comments reassuring that the $29 billion in loans it gave to Bear Stearns should be fully recovered and that the presently contracting economy should pick up in the second half. The Dow is up 7.6% from its March 10 low and up 4.1% for the week as the market gains some confidence about a turn around in market sentiment. Bernanke, along with JPMorgan CEO Jamie Dimon and Bear CEO Alan Schwartz,defended the $30 billion bailout of Bear Stearns before the Joint Economic Committee’s inquiry into the legitimacy of the Fed preventing potentially “disastrous” outcomes for the broader financial system. The Financials and the market jumped after Merrill’s chief executive, John Thain, told Japan’s financial paper The Nikkei, that they wouldn’t have to raise any more cash in respect to losses related to the sub-prime debacle. He gave confidence that the industry would recover from the $232 billion in world-wide credit losses and writedowns. After the comments, the financials rallied with the most buying interest, finishing 0.4% up after being 1.4% down. Thursday’s Jobless claims up to levels not seen since September 2005. In the last week of March they rose to 407,000 from 369,000, but markets retained confidence in light of recent strength, the big banks signaling an end to their credit woes by raising new cash and Bernanke’s reassurance about the Bears intervention. March ISM figures above expectations but a contraction in non-manufacturing activity remains. Index still under 50.
- Both BHP and RIO up in ADR form overnight, 4% and 1.72% respectively. BHP having another good day – up 46c to 3855c and RIO up 110c to 13125c.
- Metals mixed overnight – Nickel up 2.2%, Zinc down 1.5%, Aluminium down 0.9% and Copper was unchanged. Zinifex up 24c to 961c.
- Oil price down 91c to $103.92 taking a bit of breather after yesterday’s big rise on lower weekly supplies. Woodside down 77c to 5587c.
- Gold up $9.40 to $909.60. Newcrest up 49c to 3394c, Lihir Gold up 5c to 346c and Pan Australia up 3c to 101c.
- US Bonds up with the 10 year yield down to 3.58% from 3.60%.
Reserve Bank of Australia Governor Glenn Stevens has given a talk to the Australian House of Representatives Standing Committee on Economics. In a nutshell, he suggests consumers are starting to feel the recent interest rate rises and that inflation is not “out of control” and that it could be further offset by a slowing in demand. In other words interest rates less likely to be raised again.
- The Australian says Opes Prime expanded its business by aggressively chasing and offering stockbrokers high commissions to encourage their clients to give them business. Brokers were offered trailing commissions as high at 0.75%. (Brokers would normally expect to a 0.25% to 0.5% trail if they were lucky). The failed stockbroking firm also targeted directors of smaller companies by offering them finance to keep buying more of their own shares.
- QBE Insurance Group announced it was on track to meet its FY year insurance profit margin target of 19-20% as mentioned at its fiscal 2007 profit announcement earlier in the year. QBE up 3.4% or 86c to 2546c.
- Lion Selection (LST) announces it will consider whether to exercise to pre-emptive right to match a $200m bid from Beadell Resources (BDR) for 70% of the Cracow gold mine that Newcrest Mining (NCM) has put up for sale. LST up 1c to 149c and BDR down 1c to 27c.
- Downer EDI (DOW) has entered into an alliance to provide resources for future transmission and distribution work for Western Power’s electricity distribution system in WA. DOW up 13c to 652c.
- The AFR has reported today that Mitchell Communication Group (MCU) remains Australia’s largest media planning and buying agency. Its billings increased by 21% to $830m-$840m. Were’s have a BUY recommendation and 150c target price. MCU up 3c to 69c.
- Sims Group (SGM) doing well today after its main US based competitor, Schnitzer Steel, announced a better than expected earnings result and provided an upbeat outlook. SGM up 115c to 3365c.
- Wesfarmers (WES) has raised US$650m via a bond issue in the US and says it is well advanced for its debt refinancing. WES up 42c to 3976c.
- Brambles (BXB) – CHEP Chief operating officer Dave Mezzanotte resigns. BXB up 1c to 1034c.
- Macquarie Office Trust (MOF) announces solid leasing results for the 3Q across global asset portfolio. MOF up 5c to 98c.
- Mt Gibson Iron (MGX) announces Ukraine’s Gazmetall has flogged its 19.5% stake in the company at 265c a share to existing and new institutional shareholders. MGX down 16c to 277c.
- Flexigroup (FXL) – Goldman Sachs JB Were has a target price of 225c against a share price of 46c. They say it represents very good value on a full year 09 PER of 3x and a yield of 23.7%.
In the MARCUS TODAY newsletter today we have an article listing the stocks you should buy if you want to take a bet on recovery and more importantly perhaps, those stocks that you wouldn’t bother buying. We also have all the PE’s and YIELDS on the ASX 200 and a lot more of the stories and research and ideas doing the rounds.
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