Our market is down but doing a lot bit than expected — down 70 compared to the 99 drop the SFE Futures this morning after Wall Streets horrid session overnight. Financials have recovered slightly from this morning’s lows, now down 3.2% and the Property Trust sector continues to struggle, down 3%. Resources putting up a bit of a fight +0.3%.

Dow Jones closed down 239 overnight or 2.11%. Down all session — down 246 at worst — closing on its lows. Financials unable to hang onto opening gains — initially up 1.6% even after the negative weekend news. Regionals banks First National Bank of Nevada and First Heritage Bank failed and were shut down by the FDIC – taken over by Mutual of Omaha — they are the 6th and 7th banks to fail. Fannie and Freddie also fell 10.7% and 6.7% on the IMF saying there is no end in sight for the US housing slump.

Financials down 11.3% in the last 3 sessions — still up 18.5% from its July 15 low. The 236 companies that have reported so far have seen 2Q earnings fell an average 24% through to July 25. Half of them forecast falling earnings in 3Q. In other news, KKR will become a public entity through a $12-$15bn takeover of its struggling European Affiliate, KKR Private Equity and Black & Decker cut its 2008 estimate citing the unrelenting slump in US homebuilding — up 2.2%. The NASDAQ also had a stinker — down 2%.

  • Both BHP and RIO up in ADR form overnight, 1.64% and 2.07% respectively. BHP up 34c to 3834c, RIO up 136c to 11996c.
  • Metals all up overnight — Zinc up 4.46%, Nickel up 1.76% and Aluminium 1.58%. Copper up 0.43%. Oz Minerals down 6c to 194c.
  • Oil price up $2.13 to $124.72 after militants sabotaged two oil pipelines in Nigeria and Iran claimed that it had doubled the size of its nuclear program. Woodside up 173c to 5198c.
  • Gold up 90c to $927.70. Newcrest up 7c to 2965c.
  • US Bonds up with the 10 year yield down to 4.01% to 4.10%.

GSJB Were has gone underweight Banks in their model portfolio saying, “The recent trading updates by National Australia Bank (NAB) and ANZ (ANZ) indicate we are in the early days in the provision cycle for the domestic banks with news flow for the remainder of 2008 expected to be on the downside.” Their preferred picks in the sector remain Westpac (WBC) given their low risk profile. NAB down 99c to 2481c, WBC down 46c to 1987c and ANZ down 18c to 1561c.

Lots of broker stuff on ANZ Bank (ANZ) this morning after their $1.2bn in provisions announcement yesterday. GSJB Were cut their recommendation to SELL from HOLD saying “whilst ANZ valuation still looks relatively cheap, we continue to believe that ANZ could a cheap bank for a long time with risks clearly evident”. Both Merrill Lynch and ABN AMRO both cut their recommendation to NEUTRAL and HOLD respectively.

Against a fall in the whole sector the ANZ was actually up this morning at one point. Seems the 19.5% fall since Friday is enough. The NAB is down 19.25% in three days, the CBA down 15.4%, Westpac down 12.9%, St George 19.8%, BNB down 12.7%, Macquarie 11.2%. The financials sector is down 13.2% and the market down 5.84%. BHP is up 1.7%, RIO up 3.9%.

In other news…

  • Alesco Corp has announced a FY profit of $57.97m, up 32%. UBS Warburg expected $63.5m. Warns outlook for 2009 remains challenging and in the absence of acquisitions, it will be challenging to match this year’s result. Declared a 36c final dividend. ALS struggling, down 11% or 87c to 694c.
  • Centennial Coal (CEY) have released their 4Q production figures — 4Q production up 8% to 5.3m tons. 2008 production up 2% for the year to 20.5m tons. CEY up 7c to 461c.
  • Santos (STO) has announced that current acting David Knox, has been appointed as CEO and MD effective immediately. STO up 64c to 1773c.
  • Bradken (BKN) is in a trading halt pending an announcement about a proposed acquisition and capital raising. BKN last traded at 884c.
  • Westpac announced that the offer of Westpac Stapled Preferred Securities had successfully closed. Offer will boost Tier 1 by around 50bps and will raise just over $1bn. WBC down 46c to 1987c.
  • The Future Fund have supported the big four banks by purchasing $750m in NAB’s 5-year note — also looking at buying $500m in hybrids from the NAB to boost NABs capital position.
  • United Group (UGL) has won $300m worth of power and water projects. UGL up 21c to 1296c.
  • Babcock & Brown Capital (BCM) have confirmed their off-market buyback with a tender range of 350c-450c. BCM down 4c to 390c.
  • Australian Treasurer Wayne Swan says the Australian economy is in a “better placed than most countries to withstand the current global economic turmoil”.
  • Macquarie Equities maintain their BUY recommendation and 1200c target price on Straits Resources (SRL) despite cutting their EPS forecasts due to delay on their first production from Hillgrove. SRL last traded at 547c, up 2c.
  • GSJB Were maintain their HOLD recommendation on Aristocrat (ALL) after they announced yesterday they are in the market for a new CEO. ALL down 33c to 593c.
  • Perpetual (fund manager) in the press saying they are not happy with Orica’s (ORI) capital raising. Austock has cut the stock to HOLD from buy. PPT down 208c to 4096c.
  • Credit Suisse like PanAust (PNA) and have an OUTPERFORM recommendation and 150c target price saying the increase in resources at Puthlep is a boost for the project and that further increases are likely. PNA down 2c to 81c.
  • The odds of a US rate rise at the October FOMC Meeting have dropped from 82% to 66% since Friday. US GDP numbers on Thursday and non-farm payrolls on Friday are next major US economic numbers.

We have an article in the MARCUS TODAY Daily Stockmarket newsletter today looking at what a particular long term investor is doing in this market. The MARCUS TODAY newsletter now includes two daily emails — one pre-market and one midday.