The market has started the flat with the market down 5. It has been up 24 at its best and down 14 at its low. A huge performance from the resources has been offset by big fall in the banks as ANZ announces a bigger than expected provision of “credit impairment”. The SFE Futures suggested a 39 point rise in the market this morning.

Dow Jones Index was down 17, although the S&P 500 and Nasdaq were up 1 and 8 respectively. At its worst the Dow was down 98 following the jobs report which included a rise in unemployment from 4.8% to 5.1% with payrolls down more than expected. A weak economy in other words. But the market recovered to reach a high of +62 before it finished the session down. The Dow rose 3.2% last week and the S&P500 4.1% in a strong start to the Q and following the 1st Q that was the worst performing quarter since 2002 down 10.2%, a considerable fall given the fact that the S&P rose only 3.5% in the entirety of 2007. Financials led the way last week, rising 6.6% for the week as the market gained confidence from a spattering of significant announcements, including: Treasury Secretary Paulson’s sweeping reforms to the financial system – major banks UBS and Lehmans (up 1.7% on the week) raising new cash and Merrills saying they didn’t need capital, suggesting a bottoming of the credit market write-down experience.

  • Both BHP and RIO up in ADR form on Friday, 3.78% and 4.08% respectively. BHP flying at 11:30 am – 4.25% up, or 163c to 4021c and RIO up 3.5% or 458c to 13541c.
  • Metals all up on Friday – Zinc up 1.9%, Aluminium up 1.5% and Copper up 1.4%. Nickel up 0.7%. Zinifex up 21c to 1001c.
  • Oil price up $2.17 to $106.09 – The Iranian President has urged OPEC members to form a joint bank and stop pricing oil trades in $US. Woodside up 91c to 5695c.
  • Gold up $3.60 to $913.20. Newcrest up 127c to 3487c.
  • US Bonds up with the 10 year yield down to 3.46% from 3.58%.

Greenspan says (CNBC) that there is more than a 50% chance of a US recession. “I would not describe the situation we are in as a recession, although the chances that we’ll have one are more than 50 percent. This period is going to be much more difficult, from the point of view of monetary policy, than the period during which I was chairman of the Federal Reserve”. Interestingly he also singled out Spain saying, “The real-estate bubble in Spain has been bigger than most other European countries, even bigger than the one in the United States. In that sense, one would have to presume that there is more vulnerability”. Spain has been the fastest-growing major European economy for more than a decade.

  • ANZ Banking Group (ANZ) say total provision for credit impairment in the first-half of fiscal 2008 was likely to be around A$975 million, exceeding market expectations. ANZ also said in a trading update that revenue growth was expected to be around 11 percent and that the underlying business was in good condition. ANZ down 5.1% or 121c to 2235c.
  • Fortescue Metals (FMG) transported its first load of iron ore to its port in the Pilbara as it works to meet its mid-may deadline for its first shipment. Fortescue plan to produce 45 million metric tons of iron ore per year initially, ramping it up to 55 million soon there after, and to eventually achieve 200 million tons per year to directly challenge BHP and RIO. FMG up 3.9%.
  • Newcrest Mining (NCM) has announced a successful joint venture agreement with Australian Oriental Minerals (AOM) and its joint venture partner SmartTrans Holdings Limited (SMA) related to the Connors Arch project in Queensland. Newcrest is to spend $10 million over the next five years to secure a 60% stake in the venture. NCM up 4.0%.
  • Consolidated Media’s (CMJ) Lachlan Murdoch’s bid to privatize Consolidated Media in a JV with Packer’s Consolidated Press Holdings is under pressure as Murdoch’s backers, Providence Equity Partners, want to lower the proposed $4.80-a-share bid price, but CPH won’t have a bar of it.
  • Computershare Limited (CPU) on Friday completed the acquisition of Strand Business Systems and Strand Enterprises, leading UK suppliers of electoral management software and services for a net consideration of $4.85 million. CPU up 0.3%.
  • Boral (BLD) successfully completed its $113.1 million (20 million or 3.3% of its ordinary shares) off-market buy-back at a 13% discount to the market price of $6.4922. BLD down 1c to 664c.
  • Stockland (SGP) announced an $87.5 million sale of its Stockland Parabanks shopping centre as it looks for reinvestment opportunities. The sale price in line with current book value and represents an initial yield of 6.5%. SGP up 4c to 724c.
  • Santos (STO), in an attempt to increase output after cutting its 2008 production forecasts, have announced it will proceed with the 45% stake in the Reindeer gas project off WA coast paying $379 million for the project which is expected to produce its first gas in 2010. STO down 5c to 1510c.
  • St. George Bank (SGB) has appointed Les Matheson as head of Retail Operations. He will commence in June. SGN down 3.6% with the rest of the sector.
  • Sedgman (SDM) have appointed Mark Reid as its new Managing Director and CEO. He will replace Peter Hay who is retiring for personal reasons.

The ANZ have published an explanation of stock holdings post the OPES administration. Here is the full announcement – it is an astonishing list – they have 89 substantial shareholdings through OPES and intend to publish substantial shareholding notices on each. We have published the list on the website this morning sorted by size of holdings and then by market capitalization of the company involved.

In the MARCUS TODAY newsletter today we have all the usual PE’s and YIELDS on the ASX 200 and a lot more of the stories and research and ideas doing the rounds.


Peter Fray

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Peter Fray
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