The market is having a shocker – down 134 on the back of the 2.5% or 323 fall on Wall Street since Thursday. SFE Futures down a net 87 in two days. (Down 114 on Friday and up 27 overnight).

FridayDow was down 394 or 3.1% on Friday on the back of a $10 spike in the oil price and a higher than expected jump in the unemployment figures. Financials lost 5% on Friday and closed at a five year low.

MondayDow up 71. Up 122 at best. Down 14 at worst. Financials crunched – Resources outperform again. Washington Mutual down 17% as UBS predicts mortgage related losses will be circa $21.7bn through to 2011 instead of the $12bn-$19bn forecast by the Bank. Lehmans down 8.7% after reporting a $2.8bn loss and will raise $6bn in new capital. Analysts says other major banks will have bond insurance related losses due to credit rating downgrade on MBIA and Ambac. Oppenheimer analyst said Citigroup, Merrills and UBS may post $10bn in bond insurance related losses after MBIA and Ambac both down 10% after they had their credit ratings downgraded to “AA” from “AAA”. Pending Home sales came in better than expected. Up 6.03%, and New York Fed’s Geithner said global inflation will require tighter monetary policy. The NASDAQ lost 0.6%.

  • BHP and RIO both down in ADR form overnight, 1.17% and 0.52% respectively. On Friday BHP and RIO were down 0.45% and 1.56% in the US. BHP Billiton has formally applied to the Australian regulators for clearance to takeover Rio Tinto. Rio continues to trade below BHP’s 3.4-for-1 share offer. BHP down 49c to 4351c and RIO down 2% to13485c.
  • Metals mostly down – Copper down 0.3% and Aluminium down 0.2%. Zinc up 0.7% and Nickel unchanged. Most of the metals were up during the Friday session of the LME as well. Zinifex down 25c to 912c.
  • Oil price down 3% to $134.44 – it was up over $10 the previous session on the back of political tension in the Middle East and Morgan Stanley predicting tight supplies in the Western Hemisphere and strong demand in Asia could result in the price hitting $150 by Independence Day (July 4th). Woodside up 1.7% to 6162c.
  • Gold down 90c to $898.10. Its was up $23.50 on Friday.
  • US Bonds down with the 10 year yield up to 3.99%.

Main stories

  • Macquarie Group and Babcock & Brown thumped on the Weakness in the US finance sector and on renewed credit crunch fears. Down 7.6% and 7.3% respectively to 5162c and 1037c. Rest of the Bank sector doing not a lot better. Financials down 3.7%.
  • Resources outperforming – sector down 1.5%.
  • JB Hi-Fi up on a profit upgrade. Another one. Seems the discount end of the consumer discretionary market is benefitting from the high petrol price and increased mortgage payments. JBH up 6.8% or 65c to 1025c.
  • Fosters profit warning and resignation of CEO. Shouldn’t lead to massive downgrades. Share price initially fell but now rallying on bid speculation and hopes they will bite the bullet on their wine strategy. It is like putting out the “For Sale” sign. FGL up 18c to 557c.
  • Newcrest gas supply disruptions delay production. Some SELL recommendations around. They are already one of the highest cost producers. Newcrest down 43c to 2952c.
  • Minara production disrupted by gas supply disruption as well. Some SELL recommendations around. MRE down 22c to 364c.
  • Housing finance numbers weaker than expected. Down 3.0% in April compared to forecasts of down 2.0%. Interest rate rises begin to bite. Tends to suggest the RBA are less likely to raise rates.
  • Downer EDI down over 6% as JP Morgan label them a 2010 story with a NEUTRAL recommendation and a target price below the current share price They have a strategy review due out tomorrow. Leighton Holdings down 4%. DOW down 50c to 663c.