A dismal end to a volatile week – down 40 helped by the 200+ point fall on Wall Street overnight. The SFE Futures suggested a 48 point fall in the market this morning. Suncorp-Metway has stolen the lime light for all the wrong reasons (read below) down 14%. Financials, Resources and Property all down. Even the gold stocks are down despite a gold price rise.

The Dow Jones closed down 206. Down 220 at worst — down all session. 2nd monthly drop for the S&P500. The fall on the US indices follows a 4% rise the last 2-days. It was the weaker-than-expected GDP figure that did damage. 2Q GDP disappoints — economy expanded at 1.9% rate —  below the 2.3% expected. High levels of inventories impacted. Economists saying the US economy won’t return to strength until the residential mortgage market recession is out of the way – could be some time before that happens. Former Reserve Chairman Alan Greenspan had a few interesting comments. He predicted the housing market will worsen, “…nowhere near the bottom…and the resulting market turmoil isn’t showing signs of ending.” and Treasury Secretary Henry Paulson threw in that growth in the economy will be modest over the rest of the year and that the government’s stimulus package has gone a long way to “grease the economy’s wheels.” The Energy sector fell despite Exxon Mobil announcing its biggest profit ever, but it did fall below what analysts expected. Those reporting upside earnings results were: Altria down 6.22%, Disney down 4.17%, MasterCard down 9.82%, Visa down 6.87%, and Tyco down up 4.82% but mixed results as the broader market got smacked. The NASDAQ outperformed and finished slightly lower.

  • The SFE Futures suggested a 48 point fall in the market.
  • Both BHP and RIO down in ADR form overnight, 1.57% and 2.16% respectively. BHP down 15c to 3956c, RIO down 2% to 12296c.
  • Metals mostly up — Zinc up 1.83%, Aluminium up 0.69% and Copper 0.18%. Nickel down 2.15%
  • Oil price down $2.57 to $124.17 – it apparent now that China is consuming less energy since imposing restrictions on driving and closing some factories. Woodside down 12c to 5368c.
  • Gold up $11 to $913.90
  • US Bonds up with the 10 year yield down to 3.95% from 4.05%.

The big news today is Suncorp-Metway (SUN) — down 14% after releasing a Market Update this morning. More like a profit warning. Wealth Management takes a hit compared to expectations and serves as a warning to the rest of the financial sector ahead of results. Despite that they say the outlook remains positive. Their final dividend is to remain flat at 55c and FY dividend at 107c, analysts had expected a dividend of 110c for the FY. Weres say the underlying divisional profit suggests NPAT in banking some $10m below their expectations, insurance $44m below and wealth management 35m below making $90m taking their expected profit down from $611 to $525-550m. Likely to see consensus forecasts come down 15-20%. The news has unsurprisingly caused the rest of the sector to fall over, AXA down 1.8%, AMP down 4.7% and QBE down 3%…although with financials taking a hit in the US it was never going to be a good day for them.

In other news…

  • AMP (AMP) down 4.5% after it suspends withdrawals of around NZ$419m on a New Zealand property fund after cash flows receded; it comes after higher-than-usual redemptions. AMP down 5% to 623c.
  • Panoramic Resources (PAN) expects to announce a FY net profit of $60m. Nickel production was up 13% and says it expects to produce between 20,500 and 21,5000 tons of nickel in fiscal 2009. $126m in cash. PNA down 7c to 230c.
  • Fortescue Metals (FMG) says a vessel has become grounded in the shipping channel at Port Hedland, WA after departing from the company’s wharf. Ship was loaded with 155,000 tons of product. There were no injuries and no hydrocarbon releases. FMG down 4.8%.
  • Macquarie Airport (MAP) announces 1H EBITDA at Brussels airport of EUR104.5m, up 12.8% from last year. MAP down 1.4%.
  • Babcock & Brown Japan (BJT) hedge reset has realised $19m cash. BJT down 2c to 75c.
  • Just Group (JST) announces Solomon Lew’s Premier Investment (PMV) has 39.78% of the company, including acceptances. JST down 2c to 330c.
  • Mixed broker responses to Alumina’s results yesterday. Merrill Lynch maintain their UNDERPERFORM recommendation and cut their target price to 537c from 562c, UBS Warburg up their target price to 600c from 580c and say BUY, and ABN AMRO downgrade to HOLD from BUY. AWC down 9c to 456c.
  • Macquarie have upped their holding in Macquarie Infrastructure Group from 16.21% to 17.27%. Feeds the rumour that Macquarie are looking to take it private having put the stock on their “Restricted List” this week. MAQG down 4% to 4939c.
  • Australian Infrastructure Fund (AIX) – Northern Territory announces strong passenger numbers. AIX up 5c to 228c.
  • OM Holdings (OMH) has reaffirmed strong growth and positive outlook and falls 2.6%. OMH down 5c to 227c.
  • Prime Minister Kevin Rudd says government economic policy settings are strong in Australia, and that we are “better-positioned than most” developed economies to weather global slowdown.
  • Citigroup say investors looking for defensive attributes in ConnectEast (CEU) at this early stage will be disappointed. The stock is down 3.7% to 92c.
  • Brisconnections Unit Trusts (BCSCA) up slightly today to 41.5c after listing yesterday at a 60% discount to its IPO price.
  • Credit Suisse say Sonic Healtcare’s new debt facility that provides an extra $160m over a 3 year term is a positive outcome. They maintain their OUTPERFORM recommendation and 1870c target price. SHL down 2% to 1357c.
  • Alesco have released their Annual Report and say the outlook for the Australian Infrastructure sector is solid but say their outlook for 2009 is uncertain. ALS down 8c to 646c.
  • Citigroup say Anzon (AZA) could attract more bidders to rival the bid received from Roc Oil (ROC). AZA unchanged at 113c.

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