The market is down 2 — a bit disappointing after a 48 point rise on the Dow Jones and the Futures up 19. Trading in a narrow range — not a lot going on.
Dow up 48. Up 133 at best (+1.3%). Down 58 at worst (-0.4%). Main point: Retailers, consumer discretionary sector and financial sector up on falling oil price and an appreciating US dollar. Rotation from Resources to Financials continues — financials up 29% from the July 15 low and Energy down 8.8%. Gold smashed… down $36. Retailers also up. Oil down on concerns about slowing Chinese demand and a US economic slump extending well into 2009. Car manufacturers up. Airlines up. Coal stocks thumped down 5.2%.
- Both BHP and RIO down in ADR form overnight, 2.75% and 2.62% respectively. BHP down 13c to 3634c. RIO down 16c to 11150c.
- Metals mostly down overnight — Copper down 1.21%, Nickel down 0.86% and Aluminium down 0.71%. Zinc up 0.48%. Oz Minerals down 3.7% or 7c to 171c.
- Oil price down 98c to $114.44 on more signs that Chinese demand is decreasing. Woodside up 27c to 5177c.
- Gold down $36.40 to $824.30. Newcrest down 105c to 2320c.
- US Bonds down with the 10 year yield up to 4% from 3.94%.
Retailers up following their counterparts in the US market overnight – WOW up 1.1%, WES up 0.8%, BBG up 4.4%. Materials and energy stocks weak — metals and commodities down overnight — iron-ore stocks down, FMG down 3.2%, AGO down 3.6%. Uranium down, PDN down 3.2%. Gold stocks being punished on plummeting gold price overnight — NCM down 4.5%, LGL down 6.2%, SGX down 10.3% and PNA down 5.8%. Energy stocks down — ORG down 0.4%, STO down 3.2%, OSH down 6.0%, BPT down 4.6% and NXS down 4.9%. Nickel Stocks continue to get dumped — MRE down 13.5%, PAN down 8.3%. Other metal stocks off — PNA down 5.1%, KZL down 4.0%, EQN down 4.4%.
Property outperforming — up 1.3% which backs up a good day for the sector yesterday as well. The sector fell 54% from the top and in a financial sector recovery offers more bang for your buck than the banks which fell 39%.
The rotation from resources to Financials is continuing — Resources down 1.3% and Financials up 0.9% — The CRB commodity price index is down 19% – its biggest fall ever. Oil down. Consumer stocks up.
The AUD continues its rapid depreciation against the US dollar in the aftermath of the RBA statement on monetary policy yesterday which confirmed rate cuts are on the way. A$ under 88c at $87.79.
NAB’s business survey showed Australian business conditions fell to their lowest level in 7-years – suggests further deterioration in domestic demand and confirms the impending rate cut(s).
St George Bank (SGB) — Market Update — They have confirmed earnings guidance — no disasters — all good. SGB are on-track to meet EPS growth target of 8-10%. No material losses on single name exposures in the 2H. Cash profit up 12.5% for the first 10 months of FY08 on-year to $1.07bn. Not worried about its credit quality and says deposits are growing. Loan impairment in line with expectations. Continues to recommend Westpac’s 1.31-for-1 takeover.
- APN News & Media (APN) down 8.4% after posting 1H net profit down 0.7% to $71.9m in-line with the $71.0m consensus and APN’s June guidance. Dividend disappointed at lower end of the 10.5-11.6c range.
- WorleyParsons (WOR) posted net profit up 53% to $343.9m, in-line with the consensus $342.6m. Result hurt by high AUD. Guidance for 2009 favourable.
- Bradken (BKN) up 3.2%, posted FY net profit up 18% to $58m broadly in-line with the $57.5m consensus and their own guidance 2-weeks ago.
- Cochlear (COH) down 4.1% on final results that were a touch below some forecasts and aided by a low tax charge. Okayish… but downgrades expected on skewed profit forecast.
- Singapore Telecommunications (SingTel) down 8.7% after posting overall flat underlying Q1 net profit of S$865m, below the average profit forecast of S$930.3m and 5.3% down on last year. Rising Singapore dollar and weal performance from associates impacted bottom line.
- Australian Agricultural (AAC) up 4.7% on currency affected interim results that appear pretty much in line with expectations.
- Babcock and Brown (BNB) down another 4.5% after yesterday’s profit warning — brokers cutting target prices and recommendations — management’s credibility in question. Wind asset sales not as certain now.
- Incitec Pivot (IPL) down 8.6% in-line with offshore peers on steep falls in commodities overnight.
- GPT Group (GPT) up 1.44% on news it will sell its $400m homemaker center portfolio.
- Leighton (LEI) tipped by Macquarie to beat 30% net profit growth guidance with possibly 34% on Thursday.
All eyes on the Olympics — we have to thank Beijing for putting them on in a Bear market. Gives us something to do.
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