The market is down 45 after large falls in the US overnight. Resources outperforming financials. Oil and Gold the best sectors. Oil price up 4% overnight. Investment banks hard hit. Macquarie now down $10 in three days.

Dow down 227 making a 426 point fall (3.3%) in two days. Down 255 at its worst. Mortgage insurers thumped as Moody’s rating agency, in a rather astonishing “after the horse has bolted” revelation, said a computer error had incorrectly given high quality credit ratings to certain debt securities. They are conducting a “thorough review”. MBIA down 10.67%. Ambac down 7.39%. Financials down. Resources outperformed. Housebuilders down heavily. Big falls in Retailers. Tech stocks down. Energy sector outperformed on a huge jump in the oil price. Gold stocks outperform on a $14 rise in the gold price. Uranium stocks mixed. Airline stocks slammed on the oil price rise, fears of bankruptcies and as American airlines reacted with a charge for baggage as well as flight and job cuts. The Fed cut their 2008 GDP forecasts from 1.3% – 2.0% to an anaemic 0.3% – 1.2% which some people think is still in “recession denial”. Fed Minutes suggested the decision to cut interest rates had been a “close call.”

  • Both BHP and RIO down in ADR form overnight, 0.9% and 2.8% respectively. BHP RIO
  • Metals mostly down – both Nickel and Zinc down 3.2%, Copper 1% and Aluminium up 0.8%. Zinifex
  • Oil price closed in record territory once again – up $4.06 to $132.99 – on the back of a report from the Energy Department’s Energy Information Administration, which said crude inventories fell by more than 5m barrels last week. Analysts had expected an increase. Woodside
  • Gold up $8.40 to $928.60. Newcrest
  • US Bonds down with the 10 year yield up to 3.8%.

RBC strategist says that AUD/USD likely to average above parity through 2H 2008 and average above 0.9200 through to end 4Q09. Also reckons easing credit conditions and rising terms of trade will offset a slowing global environment and that RBA are likely to hike rates from here supporting the A$ versus the US$. A$ at a 24 year high.

  • ExxonMobil Corp. (XOM) has signed an agreement with the PNG government for its planned LNG plant and will begin feasibility studies. The agreement sets out fiscal details and the mechanism for a PNG government stake. Partners in the project include Exxon Mobile with 41.5%, Oil Search 34%, Santos 17.7%, AGL 3.6%, Nippon Oil Corp. 1.8%, landowner interests with 1.2% and Eda Oil at 0.2%. OSH up 19c to 643c. STO up 67c to 2047c. AGK up 18c to 1321c.
  • Challenger Infrastructure (CIF) has ended talks with UK based Arkmile Ltd. and sold its 6.5% interest in radio and TV infrastructure company Arqiva to Macquarie Group Ltd (MQG) funds for GBP129.8m. CIF down 5c to 305c.
  • ANZ Bank – ANZ – Tenders for the Wing Lung bank may not be finalized as early as expected due to an unexpected twist with Wu family members spruiking inconsistent prices for the stake. ANZ down 17c to 2142c.
  • Beach Petroleum (BPT) has entered into an agreement with Santos (STO) to take a 20% interest in the South East July concession off the coast of Egypt. BPT up 5.5c to 162.5c.
  • ABC Learning Centres (ABS) has sold its shareholding in Funtastic and in doing so has reduced forecast write-downs in this years result by a negligible $2.2m. ABS down 1.5c to 141.5c.
  • Dyno Nobel (DXL) still in a trading halt having signed an agreement to buy a 50% $37.5m stake in Turkey’s Nitro Mak.
  • Sigma Pharmaceuticals (SIP) says it will form a logistics joint venture with Metcash (MTS) if they win the bid for the Symbion drugstore distribution unit. SIP down 0.5c to 118.5c. MTS down 6c to 424c. PRY up 11c to 631c.
  • Lion Nathan (LNN) confirms analyst forecasts for a higher 2009 net profit – expects 2009 profit of between $295m and $315m. LNN up 15c to 900c.
  • James Hardie (JHX) posts an expected 20% drop in full year profit but results confirm no let up in the US housing market. Net operating profit fell from $211.8m to $169.7m. JHX down 32c to 571c.
  • SP Ausnet (SPN) 2007-08 results post a 6.3% fall in profit to $157.5m – guidance that this FY would be similar to last year and will include higher interest charges. SPN up 0.5c to 125.5c.
  • Wesfarmers’ (WES) entitlement offer to retail shareholders saw a 64% take up compared to the 96% institutional take-up. The Retail Entitlement Bookbuild for sophisticated investors bidding through their brokers will begin today (earlier than expected). WES down 24c to 3956c.
  • Ausdrill (ASL) up 17.7% after Macmahon’s $446m all scrip takeover offer – MAH offering 1.45 of its own shares for each Ausdrill share, valuing ASL shares at 253c. ASL up 36c to 245c.
  • Portman (PMM) have announced an off market share buyback with a big fully franked dividend element. PMM down 18c to 1630c.
  • Jabiru Metals (JML) in a trading halt pending a capital raising.

We have the return of the Rumour File in MARCUS TODAY today. On top of that is the broker stuff, all the PEs and Yields and the usual run down of news and views.


Peter Fray

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Peter Fray
Editor-in-chief of Crikey