The market is up 24, below futures expectations – SFE Futures were up 72 this morning. Financials strong – up 1.9% after strong rise in US financials on Friday. Resources down 2.1% following falls in BHP and RIO in the US. The property sector is up 1.7%. Results season going OK – United Group up 4.5% on results. Crane Group up 3.2% on results, Bendigo & Adelaide Bank up 3.16% on results. Profits warning – Babcock & Brown have issued a profits warning this morning and fallen 9.41%.

Dow up 302. Up 329 at best. Down 43 at worst. Main factors behind the rise in the Dow on Friday include falling oil prices and a rapidly appreciating USD (A$ down to $88.85). Dow up 3.6% for the week – S&P up 2.9% and the Nasdaq up 4.5%. Oil down 4% on Friday – down 8% for the week – still up 20% year-to-date. Energy sector fell 0.6% on falling oil and rising USD. Resources and metal prices sold off as USD rose (makes commodities more expensive and reduces demand). Euro weak on European Economic growth concerns. Financials up 3.5% although Fannie Mae posted a wider-than-expected 2Q loss – down 9%. Homebuilders and retailers well up – 7% and 4.3%. 2Q unit labour costs were up just 1.3% easing inflation concerns and boosting bonds.

  • Both BHP and RIO down in ADR form on Friday, 1.83% and 3% respectively. BHP down 49c to 3666c. RIO down 333c to 11265c.
  • Metals all down on Friday – Nickel down 3.59%, Zinc down 3.46% and Copper 3.67%. Aluminium down 2.41%. Oz Minerals down 3% or 6c to 178c.
  • Oil price down $4.42 to $115.42 despite concerns of a sabotaged oil pipeline in Turkey. Woodside down 7c to 5143c.
  • Gold down $13.10 to $860.70. Newcrest down 178c to 2461c.
  • US Bonds down with the 10 year yield up to 3.95% from 3.93%.

RBA impending rate cuts, falling oil prices and weaker AUD lifting consumer and industrial sectors – up about 2% each – DJS up 5.0%, ANN up 4.4%, WOW up 2.1%, HVN up 3.9%. Healthcare flying – CSL up 4.7% ahead of results this week, SHL up 5.1% and COH up 2.9%. Big industrials benefiting from lower oil price – exporters benefiting from lower AUD – WES up 2.0%, BXB up 2.1%, QAN up 2.4%. TOL up 2.4%. Nickel stocks falling over on a fall in the nickel price – WSA down 1.3%, MRE down 9.1%, PAN down 7.1%, and MCR down 5.6%.

RBA’s Statement on Monetary Policy is outMain message: Inflation in Australia still high – in other words the same message as last week’s statement….interest rates have peaked and cuts are on the way.

NAB comment on the oil price – “markets are in for one of the most amazing turnarounds ever seen…entire commodity boom looks like busting… this is just the start of a pullback. It is very feasible to get downside targets into the $70-$65 zone”.

  • Bendigo and Adelaide Bank (BEN) up 5.1% on results roughly in-line with consensus.
  • United Group (UGL) up 4.3% on full year profit. Described as a strong underlying result.
  • Crane Group (CRG) up 3.8% on solid result – net profit in line with expectations and guidance.
  • Babcock and Brown (BNB) down 7.8% early on profit warning – says interim net profit to be down 25-40% below that of $250m 2007 interim result.
  • Felix Resources (FLX) down 7.36% after putting construction on hold at its key Moolarben thermal coal project while awaiting NSW court of appeal who Friday upheld Xstrata’s case about the validity of the two mining leases.
  • Macquarie Airports (MAP) down 6% as Sydney Airport approach banks to refinance $762m of debt, probably at much higher rates than current levels.
  • Credit Suisse tip Cochlear (COH) to post FY08 net profit tomorrow in middle of analyst’s consensus range – up 2.63%.
  • JP Morgan predicting Bluescope Steel (BSL) to post FY08 normalised earnings up 22% on FY07 and 4% above consensus and BSL’s guidance. Despite that the price is down 5.13%.
  • AGL Energy (AGK) up 2.07% as UBS cut AGK’s target to 1590 from 1640 due to the fall in Queensland Gas price in which it has a 28% stake.
  • UBS have cut their target price on nickel stock Minara (MRE) by 50% from 370c to 185c and their recommendation to NEUTRAL from BUY – down 7.3%.

We await CBA results on Wednesday – a bellwether for the bank sector. Hard to believe they won’t be good….otherwise why haven’t they let us know in the wake of the NAB and ANZ profit warnings. Telstra results also on Wednesday. Guidance of 6-8% growth…consensus is 9.5% growth.

We have an article in the MARCUS TODFAY newsletter today looking at the Portfolio of Argo Investments, one of the biggest long term listed investment trusts in the market.

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