The market is up 102 well ahead of the SFE Futures which suggested a 4 point fall this morning. Resources suddenly in favour having fallen 25.7% from the top on May 19th. Resources up 5.3%. Financials up 0.4%.

Dow down 109. Down all session. Down 189 at worst. Main drivers – Retail sales weaker than expected making US interest rates rises in the US less likely causing a US$ fall and a commodity price rise. Oil price and metal prices well up. Resources up 2.4%. Financials down 3%. Commodities up 2.4%, gold up 2.2% and energy up 3.4%. Energy price sensitive sectors down – consumer discretionary stocks (airlines and autos) down 1.6% and retailers down 2.4%. Banks and brokerages down on lending practice inquiry along with earnings and recommendation downgrades in the sector from brokers. Industrials down 0.8% on poor earnings.

  • Both BHP and RIO up in ADR form overnight, 3.42% and 3.34% respectively.
  • Metals had a great night – Nickel up a big 8%, Copper up 4.05% and Zinc up 2.68%. Aluminium up 1.4%.
  • Oil price up $2.86 to $115.96 after the government reported a bigger-than-expected drop in U.S. inventories.
  • Gold up for the first time this month – $16.80 to $827.60 – down 12% since the end of July.
  • US Bonds down with the 10 year yield up to 3.94% from 3.90%.
  • Diversified miners up – BHP up 4.9%, RIO up 5.3%, Oz Minerals up 9.1%
  • Iron ore stocks pumping – FMG up 6.3%, MGX up 4.8%
  • Nickel stocks flying on the 8% jump in the nickel price – WSA up 4.9% (tipped as a BUY by Charlie Aitken this morning), Minara up 10.8%, Panoramic up 10.1%, Mincor up 12.7%.
  • Copper stocks flying on higher copper prices overnight – PNA up 11.5%, KZL up 5.8% and EQN up 11.1%.
  • Uranium stocks up – PDN up 8.5%, ERA up 6.1%. They started moving yesterday on reports that Cameco’s Cigar Lake uranium project is still having issues with flooding. They were up 7.8% and 4.6% yesterday.
  • Coal stocks well up – Felix (subject to bid talk) up 18.9%, NHC up 7.5%, CEY 10.2%.
  • Gold stocks up on gold’s bounce last night – NCM up 5.9% and LGL up 7.2%. SGX up 8%.
  • Banks all down following offshore financials last night.

RATE CUTS AHEAD – RBA Deputy Governor Ric Battellino told a parliamentary hearing that recent rate hikes have already done their job and slowed demand… “That’s why we now find we are in a position to cut interest rates.” He says the big issue is whether the banks will follow in cutting rates.

David Jones (DJS) up 7.95% after increasing its profit guidance by from 8-13% to 20-25% for the 2H08, Has also released 4th Q sales numbers described as “very strong and commendable” by one broker. 2H like-for-like sales up 1.5%. Expect 5-10% FY09 net profit growth. Cost savings program has been very effective. Sales momentum has slowed but DJS said they’re well positioned for expected tough retail environment extending into FY09.

ASX Limited (ASX) up 3.85% after posting solid FY net profit up 24.9% slightly ahead of consensus expectations. Final dividend of 93.9c. Strong cost control with cash operating expenses down 1.5% on-year. Cautiously optimistic about medium-term prospects but typically not specific.

Leighton Holdings (LEI) posted FY net profit up 35% with full year earnings up to $607.9m ahead of consensus of $600m – up from $450m a year ago. Sales up 22%. LEI benefiting from expanding spending in mining and civil infrastructure and property development in the Middle East. LEI in trading halt ahead of a 1-for-14 $700m rights issue at $35.35 per share (now 4236c) – a 15% discount – to raise cash to fulfill contracts in Australia, Asia and the Middle East.

PMP Limited (PMP) up 3.3% after posting FY net profit 70% up on-year benefiting from a one-off settlement on a long-standing tax dispute. EBIT before significant items was down 6.8%, in-line with guidance. Dividend 3c. The announced 5% buyback was well received.

Stockland Group (SGP) up 3.4% after posting FY net profit of $705.2m, down 59% on year. But operating profit was up 10% to $674m in-line analyst’s $673.5m consensus. 23.9c dividend maintained. Operating profit boosted by shopping centres and office rent. Earnings growth has slowed due to the downturn in the Australian housing market which impacted on its residential development business. Give guidance of a small 5% increase in EPS in FY09, and “assuming that market conditions do not deteriorate further” forecast a higher EPS growth in FY10.

Futuris (FCL) up 1.6% posting yearly net profit of $84.2m, a 21% drop on last year due to one-off items, restructuring costs and the sale of property assets. FCL had already foreshadowed to big drop in profits in June when its CEO resigned. The poor result was in-line with the $80-85m profit warning earlier this week. Maintains FY09 profit guidance saying agricultural markets remain strong and that conditions are generally better than 12 months ago.

Orica (ORI) down 0.85% after acquiring its partner’s 48.6% interest in the Peruvian Samex JV for $58.2m.

Macquarie Infrastructure Group (MIG) up 1.14% after announcing it will buy further 2.5% of Westlink M7 for $38m, bringing its stake to 50%.

ROC Oil (ROC) up 5.36% on commencing drilling its Arrow-1 exploration well.

Brazil’s Vale and China’s Shenhua Energy are two serious contenders looking over the books of Felix Resources. Vale may also be interested in Aquila Resources. FLX up 16.77% and AQA up 1.32%.

There is an Article in the MARCUS TODAY newsletter today about “Gangs” including a description of a lot of stockmarket gangs like The Warren Buffett gang. A delusional band of groupies with unrealistic ideas that they can read a few quotes and emulate the smartest investor of our time. Any many more.

MARCUS PADLEY is the Author of the MARCUS TODAY Daily Stockmarket Newsletter.

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Peter Fray

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