The market is down 41. All sectors down despite the US closing up. Industrials down 2% and Telecoms down the most – 2.2% – with Telstra bring the index down 6 points single-handedly. SFE Futures up 28.
Dow closed up 34. Up 86 at best. Down 51 at worst. 9 out of 10 sectors up – only energy down after rising 17% over the last year. Citigroup announced it would post further losses from subprime exposures this quarter – similar in magnitude to last quarter. Treasury Secretary Paulson said some institutions are finding it challenging to revalue assets and that further capital raisings will “continue to broaden.” Financials dropped 2% at lowest but finished 0.9% up. BB&T Corp shunned rumours and announced it would lift its dividend this year – encouraged financials. Regional Banking sector fell less than 0.1% after dropping 5% in early trading – good to see some consolidation after last couple of down days. Insurer American International Corp, rose the most on the Dow – up 4.9% – as they were upgraded to BUY by Citigroup. 17 of 18 semiconductors up – sector up 2.5% as Intel (the world’s largest chip maker) rose 2.56%. Lower oil prices lifted the Transportation Index 3.4% and boosted the Amex Airline Index more than a whopping 10%. Large insurers dragged down by Coventry Health Care’s worst day on the market for 9 years. Jobless claims up– but steady on monthly averages. Philadelphia Fed Regional Manufacturing Index down more than expected. Leading Indicators climbed 0.1% to match previous month.
- Both BHP and RIO up in ADR form overnight, 1.5% and 0.34% respectively. BHP up 21c to 4520c. RIO up 68c to 13951c.
- Metals mostly down – Nickel down 3.6%, Zinc down 2.6% and Aluminium down 0.6%. Copper up 1.1%. Zinifex down 19c to 853c.
- Oil price down $4.66 or 3.5% to $131.88 after China announced plans to raise caps on gasoline and diesel fuel prices, a move that could reduce global demand. Woodside down 145c to 6405c.
- Gold up $10.70 to $904.20. Newcrest down 40c to 2748c.
- US Bonds down with the 10 year yield up to 4.20%.
Transurban have successfully completed its $659m placement priced at 549c. Macquarie Equities actually upped their recommendation on Transurban yesterday to OUTPERFORM from Neutral. They have a 691c target price, contrary to predictions yesterday that the stock would re-open below $3. TCL being punished for a 60% fall in forecast FY09 yield, despite the positive move by CEO to restructure the capital management policy of the firm. TCL down 12.8% or 70c to 471c in early trading. UBS also maintain their BUY and 679c target price.
- Macquarie Infrastructure (MIG) announces 10c distribution for 6 months to June 30 and 20c distribution guidance for next FY. Implies yield of 8.1% compared to Transurban’s (TCL) 4.6%. Coverage of distributions by proportionate earnings are 50-60% – it’s in the spotlight now – could wipe out half of distribution if they follow Transurban. Says cash balances in excess of $900m at May 31. Gearing 46.5%. MIG down 12c to 256c.
- B&B Power (BBP) down 20% in early trading to 57.5c – slashed two stops down from Outperform to UNDERPERFORM by Credit Suisse after BBP cut final dividend and lowered FY09 earnings and dividend guidance.
- Qantas Airways (QAN) April’s revenue seat factor (seat fills across its domestic and international flights) was 1.8% down on-year to a measure of 79%. Domestic seat factor down 1.6% to 80.6%. International down 1.9%, also to 80.6%. QAN up 4c to 316c.
- Incitec Pivot (IPL) announced production issues at Phosphate Hill yesterday – Merrills cut FY08 earnings forecast by 8%. Fell 7.4% on open. IPL down 5% – down 1030c to 18940c.
- Indophil Resources (IRN) has accepted a $1.28 /share, $540m cash offer from the Alsons Group / Hong Kong-based Crosby Capital Partners consortium – the offer is at a 94% premium to the last closing price. This is a 28% premium to Xstrata’s existing offer of $1 per share. IRN rocketing – up 20% to 138.5c.
- FKP Property Group (FKP) responds to off market $5.00 /share $1.3bn takeover approach by Lend Lease – says the offer substantially undervalues FKP – the offer represented a 32% premium to last trading price. FKP boosted 23% on the bid – up 85c to 465c.
- Mirvac Group (MGR.AU) cuts earnings guidance after carrying value of assets by 3% to 5% ($300-$400m) Earnings guidance now 31.4-34.3c, down from 34.3c. MGR down 6c to 312c.
- Macquarie Airports (MAP) says Qantas’ and Virgin’s capacity cuts only has a 2% affect on seats on an annualized basis – says load factors and flight substitution impact on traffic should be significantly lower. Core traffic passenger growth strong at 7% in May. MAP down 5c to 228c.
- Australian Worldwide (AWE) – NZ Oil and Gas increased estimates at the Tui Oil field to 50.1m barrels, almost doubling the size of initial estimates. AWE down 13c to 396c.
- Cabcharge (CAB) has increased its holding in UK operations, ComCab, from 26.4% to 39.2%. CAB down 5c to 800c.
- Healthscope Limited (HSP) – have entered into a commercial supply agreement for PapType detection test from Genera Biosystems (GBI). HSP up 15c to 429c.