The market is having a shocker – down 96 hitting a two year low. The SFE Futures suggested a 44 point fall. It looks like the Resources bubble is bursting today. Resources pummeled after steep falls in energy and commodity prices overnight – down 6.1% – with BHP down 6.4% and RIO 5.6%. Property Trusts also struggling – down 2.2%. Financials started down but now up 0.7%.
Dow Down 42. Up 56 at best. Down 105 at worst. 2 stocks down for every 1 up. 6 of the 10 sectors now more than 20% off their highs. Oil price and CRB commodities index fell – down 3% and 3.4%. Energy and resources down to 6-month lows – down 4.9% and 4.2% – speculation of a large hedge fund liquidating positions in these sectors. Freeport-McMoran down 12%. Tesoro and Valero – two biggest US refiners – fell 42% and 38%. Range resources – big gas producer – fell 43%. Exxon Mobil down 3.9%. Transport down 0.8% despite the fall in oil prices. Only consumer discretionary, consumer staple and healthcare rose – up 0.5%, 1.2% and 1.3%. Financials finished down 1.3% (was down 2.9% at worst). Oppenheimer’s Meredith Whitney told CNBC that the market turmoil is “far from over and that home prices will fall much further than people expect”. Citigroup reported its first loss since 2005 – biggest US credit card lender lost $176m in the 2Q on repackaged credit-card securities. Price fell 0.21%. Bank of America down 2.13% and Wachovia down 9.9% as broker recommends selling their stock. Washington Mutual down 8.5%. London based HSBC posted 1H 08 profit down 29% due to losses on US subprime. Price fell 1%. June personal spending better than expected but higher than expected PCE price inflation offset any enthusiasm. Factory orders were more healthy than expected.
- Both BHP and RIO down in ADR form overnight, 3.74% and 5.69% respectively. BHP down 220c to 3614c. RIO down 603c to 11207c.
- Metals all down overnight – Both Copper and Zinc down 4.2%, Zinc down 1.84% and Nickel down 1.5%. Oz minerals down 18c to 170c.
- Oil price down $3.58 to $121.45 – a 3 month low – on the back of rising OPEC outlook. Oil traded below $120 for the first time since May. Woodside down 301c to 5099c.
- Gold down $8.90 to $900.10. Newcrest down 259c to 2714c.
- US Bonds down with the 10 year yield up to 3.97% from 3.94%
AXA Asia Pacific Holdings’ (AXA) up 8.62% in a relief rally after announcing interim results – operating profit of $295m – up 11% against consensus of $263m but included a $25m one-off gain – otherwise only mildly ahead of consensus at $270m. Headline result (NPAT pre one offs) at $101m was down 73% and below consensus of $121m after one-off mark-to-market on investments (-$140m). No earnings guidance. Dividend maintained (some expected a rise). Weres note the result is actually well ahead of consensus ex mark-to-market losses. AXA and the rest of the sector took a dive on the Suncorp-Metway profit warning last week.
RBA likely to leave rates at 7.25% this afternoon. We await their decision at 2:20pm. RBA expected to soften their policy stance after recent weak economic figures.
Services sector activity plunged 2.6 to 42.8. Consumer and business confidence slid in July as reflected in weaker household and business activity. Weakness seen in many sectors across the economy.
16 analysts average RIO’s upcoming underlying 2H earnings at an increase of 46.3% – iron ore prices have lifted profit but input costs across various businesses unknown.
Fortescue Metals down 5.6% despite presenting at the Diggers & Dealers conference in WA.
Just Group have given way on the $810m takeover battle from Lew’s Premier Investments saying they will support the bid if they declare the offer unconditional. JST down 21c to 339c.
Macquarie Airports (MAP) Copenhagen 1H EBITDA up 10% tracking ahead of Were’s expectations but they forecast a slowdown in traffic growth. Sydney’s EBITDA up 9.5%. MAP maintain forecast profit before tax for 2008 to be slightly higher than 2007. MAP up 7.55% or 21c to 299c.
Seven Network (SEV) up 3.81% after results and a buyback of up to 40m shares (19.4%). FY results broadly within consensus but profit result and comparables largely irrelevant given the ongoing transformation of the business.
ABC Learning (ABS) up 3.5% after it appoints five new board members.
Asciano (AIO) – Yesterday’s private equity bid at $4.40 per share seen by ABN AMRO as “opportunistic” and say they’ll have to offer at least $5.00 per share. AIO up 3% or 15c to 498c.
Sims Group down 7% on recent media articles suggesting US scrap metals will weaken. SGM down 7.31% or 235c to 2978c.
Gold stock going backwards after another fall in the gold price – NCM down 8.71%, LGL down 9.3% and SGX down 5.8%.
Nickel and copper stocks get a beating on another fall in the nickel price – WSA down 6.2%, PAN down 10.9%, MRE down 14.8%, PNA down 10.9%.
Lend Lease recovering up 3.2% after yesterday’s profit warning including $120m of provisions for losses on UK assets – brokers say the losses were expected, most maintain their recommendations – some dropped price target.
India demand set to boom – Citigroup analyst projects Indian demand for imported coking coal could double from current levels to 46Mt by 2010 – says no shortage of new entrants with 10 emerging players presenting at a recent conference.
A bit of warning from Oppenheimer’s Meredith Whitney who told CNBC that the market turmoil is “far from over and that home prices will fall much further than people expect”.
The FOMC meeting is on tonight. Not expected to change rates although the bias is moving towards a rate rise.
In the newsletter today we look at why the nickel stocks are falling out of bed and we have an article about what to look forward to from the results season…..not a lot basically.
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