The market is having an up day for a change – up 79 – it was up 82 at its high. The SFE futures predicted a 38 point gain in the market this morning.
The Dow Jones index closed up 152. Up 160 at best. Down 56 at worst. Finished on its highs in a late rally (which the UK missed). Dow now 19.6% down from its highs. It was a fantastic night for financials – sector up 5.7% after speeches by Bernanke, Treasury Secretary Paulson and JPMorgan’s CEO gave the market some confidence about the credit problems. Anyone would think the credit crisis was over. Sector hit a 5 year low yesterday. The oil price fell over again – down 5.33 to $136.04. Down $9 in two days. Said to be little more than “technical selling” – not great fundamental reasons. Iran’s President said they’d prefer to avoid war with Israel and the US. Resources down – BHP and RIO down 6.12% and 5.66% in the UK – but the UK market closed when the Dow Jones was down – it missed the late rally. BHP and RIO close in the US was not as bad. Good results from Alcoa – Alcoa opened the 2nd Q results season after hours. Results are better than expected. The NASDAQ also had a good session finishing up 2.28%.
- Both BHP and RIO down in ADR form, 1.44% and 2.04% respectively. They fell further in the UK but when the UK closed Wall St was down – the rally happened late in the session.
- Metals all down overnight – Copper down 2.56%, Zinc down 3.71% and Aluminium 5.1%. Nickel down 1.56%.
- Oil price down $5.32 to $136.06
- Gold down $5.50 to $923.30 on the back profit taking by traders. Oil price now down $9.27 in the past two sessions.
- Bonds unchanged with the 10 year yield stable at 3.88%.
Financial sector up 2.4% leaving resources in their wake – Resources up 0.5%. There is a rotation into financials from resources going on. Fortescue Metals is down 32% in 10 days. BHP and RIO down 14% in 10 days. All the small resources also seem to losing their “hope” premiums, in some cases very rapidly, most evident in the iron ore and coal sectors.
Consumer sentiment fell in July from June by 6.7% to 79, the lowest level since 1991. A$ falls to 95c on thoughts the RBA will not be raising interest rates again this cycle.
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· Alumina (AWC) doing well after it JV partner Alcoa announced promising results in the US overnight. Up 7.3% or 31c to 444c.
· Insurance Australia Group (IAG) has released its Investor Briefing and Trading Update this morning – the guidance looks OK, the dividend has been cut back as expected. IAG up 1c to 368c.
· Bill Express goes bust– ANZ have a $53m exposure to Bill Express which went into administration yesterday after a recapitalisation and restructuring attempt was withdrawn.
· Banks doing well today on the back of a massive rally in some of the US financial stocks overnight. ANZ up 2.4%, Macquarie up 6.3%, Babcock & Brown up 5%.
· Sigma (SIP) and Metcash (MTS) will find out today if their JV bid for Primary Health (PRY) drugstore distribution unit has been approved by the regulator. SIP up 1c to 106c and MTS up 1c to 386c.
· Asciano (AIO) rebounding today – up 18c to 289c – after releasing a statement late last night reiterating guidance and saying they knew of no reason for the sell-off that knocked 19.29% of its share price yesterday to 272c.
· Cabcharge Australia’s (CAB) 49% owned subsidiary ComfortDelGro Cabcharge has bought bus builder Custom Coaches for an undisclosed sum. CAB up 4c to 758c.
· GPT Group (GPT) down another 8.5% bringing its fall to 31% since the start of the week. S&P lowered its credit ratings on the stock one notch to BBB from BBB+ with a negative outlook. GPT down 5.5c to 181c.
· Oxiana up 2% with JP Morgan upgrading to OVERWEIGHT with a 260c target price. Now 215c. They say it is good value after its recent sell off. OXR up 6c to 216c
· Equinox down another 5.8% making a 15.7% fall on the news of a fire at their project in Zambia yesterday. Ausenco (AAX) the mining contractor responsible for the project is down another 3.8% making a 16.6% fall in two days.
· AGL Energy (AGK) has announced it will acquire a 9.99% investment in Torrens Energy (TEY) via a share placement at 40c a share for $2.2m consideration. AGK up 29c to 1408c.
· GRD Ltd (GRD) has been awarded a contract by Rio Tinto to carry out Order of Magnitude Studies on the Sulawesi Nickel Project in Indonesia. GRD up 1c to 75.5c.
UBS says Lihir is their preferred gold stock as they cut its target price from 450c to 420c and the Newcrest target price from $42 to $34. Still has a BUY on both. LGL down 6c to 296c
· Downer EDI (DOW) has secured $500m worth of contracts in the past few months. Most notable contracts include a $150m 5 year contract with TelstraClear in New Zealand and mechanical & electrical contracts in excess of $122m. DOW up 25c to 630c.
· Bluescope Steel up 2% as JP Morgan ups earnings forecasts on the back of higher steel price expectations. BSL up 20c to 1018c.
· A senior Cameroon official told a Cameroon Radio at the country’s Ministry of Industries, Mines and Technological Development that it has 50 years of aluminium reserves remaining worth around $65bn. He said, “For this potential to be developed, we need transport infrastructure, energy, among others”.
· Commonwealth Property Office Fund (CPA) has successfully refinanced all of its debt maturity for the year to June 30, 2009.
· Housing starts for owner occupied housing fell 7.9% in May, compared to the 2%-3% fall economists had predicted.
Catch Marcus on ABC Lateline last night with Ticky Fullerton.
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