Our market is doing well today – up 80 – that compares to the 34 point rise the SFE Futures predicted this morning and the 135 point bounce on Wall Street overnight. It’s a tale of two sectors today, financials rocketing along +4.2%, resources are letting the team down –1%.
The Dow Jones closed up 135 – Up 150 at best. Down 80 at worst. It opened 80 down on worse-than-expected earnings reports from the night before but ended up finished the session well out of the red. The big fall in the oil price – Oil price down $4.18 to $127.25 (down 3.18%) as Tropical Storm Dolly eased helped the situation. Financials had a great sessions – up 8.39% – up 31.5% over the last week. Bank of America up 13% – biggest contributor to the Dow. Diversified banking sector – up 13.6%. There were some positive comments from Deutsche Bank saying financials are overcoming credit losses helped spark buying interest in the financials sector, and Wachovia posted lower-than-expected 2Q losses – price up 27% – announced a non-dilutive capital raise of $5bn and forecast $2bn in cost savings. Consumer discretionary also outperformed – up 2.7%. Tech stocks put on more than 1% on average despite Apple closing down 2.6% – 4Q profit below consensus.
- Both BHP and RIO down in ADR form overnight, 1.47% and 2.49% respectively.
- Metals all slightly down – Zinc down 0.7%, Aluminium down 0.33% and Nickel down 0.25%. Copper down 0.6%.
- Oil price down $4.18 to $127.25 as Tropical Storm Dolly grew increasingly unlikely to threaten supply,
- Gold down $15.20 to $949.50
- Bonds down with the 10 year yield up to 4.10% from 4.04%.
CPI figure has come in slightly higher than expected – up 1.5% in June Q, 4.5% through the year. Keeps bias on rates slightly to the upside, but hold for now. Commercial banks are doing the RBA’s job by lifting rates. Weres suggest that the RBA’s comments on inflation confirm their view that rates will stay on hold until mid 2009 where cuts will begin.
· Macquarie Group’s AGM and Trading Update is out. Initial reaction is positive – they seem to be in line with expectations – in this market anything that isn’t a disaster is being seen as good. Main themes: Solid start to 2009 financial year, CEO Moore says it is becoming difficult to repeat last FY performance of $1.8bn profit, business is performing well in what is a difficult environment, No trading problems or credit exposures – but modest credit exposures to the hedge fund industry and that 1Q profit will be lower from last year. GSJB Were say that the update overall did not provide any major surprises and that comments regarding not repeating last year record performance was already factors into their recommendation which currently stands as a HOLD with a 6281c target price. The market is taking it more positively than that. Having opened at 4880c MQG is now up 9.5% at $51.
- BHP Billiton released their 4Q Production Numbers – immediate comment is that the record numbers on iron ore, copper and oil were all expected. Not much to pump the price (the production figures are rarely very price sensitive). They are taking their lead from the fall in the stock in the US overnight and the fall in metal and oil prices.
- Commonwealth Bank of Australia (CBA) has released a statement confirming that it has entered into exclusive talks and due diligence to buy ABN AMRO’s Australian and New Zealand assets which are estimated to be worth $800m. NAB has pulled out of the process.
- AGL Energy (AGK) has bought Allco Finance Group (AFG) Australian wind farm division for $12.5m.
- CXS – Chemgenex responds to a speeding ticket after jumping from 100c to 117c yesterday on rumours of corporate action after an issue of shares to Stragen and hopes for a commercialization agreement for their lead product.
- GrainCorp (GNC) announced it will not increase its offer for Ridley (RIC). The fall in RIC’s share price the overall state of the share market has made the offer unattractive they say.
- Premier Investments (PMV) say it will increase the cash component of its offer for Just Group (JST) by 15c a share if it reaches 90% share ownership. The increase takes its offer to $2.245 in cash and 0.25 PMV for each JST share. They have declared its bid final.
- Crown (CWN) has walked away from plans to invest in a casino with Bloombury Investments in the Philippines because of the credit crisis.
- Mincor (MCR) have released their production numbers – FY Nickel output up 28%. Sales revenue for the 4Q was $76.6m, down 6% on the 3Q. Numbers better than expected – stock up 9.35%.
- Without any particular announcement Panoramic Resources (PAN) is up 12% after a “short attack” in the last month that has taken the stock down 48% from 440c to 225c.
- Fortescue evaluating a multi-billion-dollar funding package from Asian customers including China’s Baosteel, as it looks to expand its Pilbara project. This is presumably why the stock jumped 12.4% on Monday.
- Stocks like Qantas that have been smashed by the oil price rise and enjoying its fall. QAN up 5.6%. Virgin Blue up 6.3%.
- Abacus Property Group (ABP) has put out a presentation that anyone interested in the property trust sector should have a look at. Sector having a good bounce today.
- For those that haven’t picked it up yet, OZL is the new OZ Minerals stock code (formerly know as Oxiana).
- Aditya Birla Minerals (ABY) down 12% on the back of yesterday production numbers. Credit Suisse have described them as poor.
- Rams Home Loan flying after announcing they will begin an on-market share buyback of up to 10% of issued securities over the next year.
- Admiral Resources (ADY) have provided a update on their Hawkswood loan payment.
- Axa Asia Pacific Holdings (AXA) said its total FUM, administration and advice fell 13% in the half compared to last year
Will have a good uranium summary up on the website later — from the WA nuclear conference — it is all very positive for the long term (two year) uranium demand outlook. The MARCUS TODAY newsletter now includes two daily emails – one pre-market and one midday. For a free 21 day trial of the MARCUS TODAY newsletter please go to this link or www.marcustoday.com.au