The market is up slightly. Resources up 1.8% on the back of record oil prices and financials down 1.0%.

Dow up 51. Up 77 at its best and down 106 at its worst. Volume 18% below average. Good reaction to results. Energy sector up on talk of a $200 oil price. Resources up. Financials up 0.9% having been down 1.9%. $12bn JV between Sprint Nextel and Clearwire Corp injects hope that deal flow is returning. Oil price almost hit $123 on a Goldman Sachs prediction that the oil price could hit $200 within two years. Goldmans were rubbished when they predicted oil prices of $105 in a “superspike” scenario in April 2005 when oil prices were $57. S&P 500 dipped below 1400 and found support. Now down just 3.4% this year and up 11% from March 10th. UBS results were pretty terrible ($11.8bn loss) but were expected to be. Price down a touch.

  • Both BHP and RIO up in ADR form overnight, 2.24% and 1.76% respectively. BHP up 106c to 4548c. RIO up 394c to 14587c.
  • Metals all up overnight – Copper up 1.3%, Nickel up 1.7% and Zinc 2.6%. Aluminium up 1.8%. Zinifex up 21c to 1030c.
  • Oil price up $1.88 to $121.82 on the back of a new prediction from Goldman Sachs that oil prices could rise to $150 to $200 within two years. Woodside up 116c 6116c.
  • Gold up $3.60 to $877.70. Newcrest up 71c to 2971c.
  • US Bonds down with the 10 year yield up to 3.92%.

If you were watching CNBC this morning the whole debate is whether the market has bottomed and the fashionable view is that it has with smarty pants fund managers now all claiming they are fully invested.

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  • Talk of another bidder for IAG. Not doing much for the IAG share price today.
  • Centro Properties (CNP) in a trading halt pending clarification of an extension to the loan facilities.
  • Fortescue flying on expectations their first shipment will go a little bit ahead of schedule. Hit a record high today of 920c on their way to $10. Up 43c to 906c. Also talk that BHP and RIO will negotiate am 85% increase in iron ore prices, and speculation that the Chinese may take a stake in FMG. JP Morgan says “We can’t justify that share price with conventional valuation work” and have a 460c target price.
  • JB Hi-Fi (JBH) expects net profit to be at top end of guidance between $57-60m, up 49% on FY07. JB said it had solid trading in Feb, Mar and April. JBH up 5% or 47c to 1022c.
  • Talk of a bid for Oxiana from Xstrata. Up 5% after a 3.4% rise yesterday.
  • Westfield Group (WDC) puts out 1Q review – reiterates strong financial position and stable cash flows. High occupancy levels. UK sales growth up 3.7% and Australia sales growth 5.9% over the year, but US slowing (down to 0.7% over the year). WDC down 1c to 1800c.
  • Corporate Express (CXP) releases year to date results for 1Q 2008 – 1Q08 revenue dropped from $304.3m to $301m due to Easter break. Gross profit went from $82.3m to $84.7m and EBIT increased from $23.2m in 1Q 2007 to $23.8m. Up 1c to 536c.
  • Aristocrat Leisure (ALL) to settle class action brought against it for market manipulation – the AFR today reported that ALL will likely pay-out a large amount of the damages claimed. ALL down 20c to 720c.
  • St George Bank down another 2.5% this morning on the research reaction to their results yesterday.
  • Talk of the A$ going to parity again after the RBA statement yesterday expressed inflation concerns rather than credit market concerns. Westpac predicting parity my March 2009.

We have David Jones 3rd Q sales numbers tomorrow along with News Corp and Sims Group results. NAB results on Friday. In the newsletter today we have an article about the stock market parallels with Boxing and write about where interest rates are going, the strength in iron ore stocks and a bunch of other stuff. ” 

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Peter Fray
Peter Fray
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