It’s a sea of red today – down 91 – after a shabby session on Wall Street overnight. The SFE Futures suggested an 85 point fall. Resources down 2.2% – BHP down 3.1% the after announcing a 6th consecutive record FY profit yesterday that came in line with expectations. Financials down led again by Babcock & Brown (BNB) – down another 9.5% today ahead of its result on Thursday. RBA Minutes are expected later on today. The market is factoring in a 100% chance of a 25bp rate cut next month and a 50% chance of a 50bp cut. .

The Dow closed down 180. Up 30 at best. Down 226 at worst. Finished a bit above session lows. Light news flows saw profit taking. Volumes were the lowest since December 27th and 29th. The main story of the night was talk that Fannie Mae and Freddie Mac will require recapitalization by the US Treasury – prices down 22.25% and 25% to their lowest level in two decades. Suggestions shareholders will get zero. They have $1.6 trillion of debt. Crude fell below $113 for the first time in 3-months Tropical Storm Fay in the Gulf of Mexico less severe than expected. In other news, Lehmans down 7.05% on concerns about an unexpected impending 3Q loss and Hershey finished nearly 10% lower after they said their prices will curb growth. The NASDAQ also struggled closing down 1.45%.

  • Both BHP and RIO slightly up in ADR form overnight, 0.4% and 0.37% respectively.
  • Metals mostly down overnight – Nickel down 3.55%, Zinc down 1.14% and Aluminium down 1%. Copper down 0.05%.
  • Oil price down 54c to $112.92 – closing below $113 for the first time in 3 months – as Tropical Storm Fay steered clear of oil-producing infrastructure in the Gulf of Mexico. Woodside down 77c to 5503c.
  • Gold up $13.40 to $801.80
  • US Bonds up with the 10 year yield down to 3.82% from 3.84%.

For those that might have missed it – BHP Billiton announced its FY result late yesterday. OK but not dazzling. In line. The dividend was US70c against expectations of 65c. They call it a “rebasing” of the dividend. Have been well received….positive long term view on commodities as you might expect. Still pursuing RIO. FY Net Profit up to $15.39bn from $13.42bn, up 14.7% – slightly below analysts’ expectations of $15.86bn – 6th consecutive record FY profit. ABN AMRO maintain their BUY recommendation and up their target price to 5034c from 4935c, Patersons also upped their target price to 5080c from 4880c and maintain their BUY recommendation. BHP down 113c to 3747c and RIO down 3% to 5503c.

It’s been another busy day on the earnings front:

  • JB Hi-Fi (JBH) – GOOD – Has reported a 61% increase in FY profit to $65.1m, beating analysts’ estimates of $64.1m. Revenue up 43% to $1.83bn and declared a final dividend of 16c, up from 6c last year. GSJB Were has described the result as “very strong”. JBH up 40c to 1278c.
  • Lihir Gold (LGL) has posted a 1H net profit of $36.5m, up from the $46.5m loss in the 1H last year. GSJB Were say the result was below their expectations and that costs came in higher than its estimates. LGL down 2c to 222c.
  • Monadelphous Group (MND) – GOOD – Has announced a better-than-expected FY net profit. Up 15% to $69.5m from $60.4m, analysts’ had expected $63.2m. MND down 63c to 1380c.
  • OneSteel (OST) – GOOD – announced a FY net profit (before significant items) of $315m, much better than the $283m analysts had expected. OST up 48c to 627c.
  • Boral (BLD) – BETTER THAN EXPECTED – has reported a net profit of $242.8m, down from $298.1m but above consensus of $234.9m. Revenue up 6% to $5.2bn and maintained their final dividend of 17c. BLD down 18c to 593c.
  • Newcrest Mining (NCM) – OK – Underlying profit before hedge restructuring was $493.9m, more than double the previous year’s $191.2m but below analysts’ forecasts of $502.39m. Declared a final dividend of 10c. NCM up 50c to 2508c.
  • IRESS Market Technology (IRE) announces a 44% increase in 1H profit to $18.1m, in line with expectations. GSJB Were expected $16.4m. IRE down 10c to 610c.
  • Oil Search (OSH) – has posted a 184% rise in 1H net profit to US$133.3m, in line with expectations. GSJB Were expected $US134.4m. OSH down 10c to 505c.
  • GWA International (GWT) announced a net profit of $45.9m with a final dividend of 8c. Around 3% below GSJB Were’s expected figure. GWT down 20c to 290c.
  • CFS Retail Property Trust has announced a FY profit of $669.2m and a final distribution of 12.5c. CFX up 3c to 207c.

Other stuff

  • Origin Energy (ORG) has continued to tell shareholders to reject BG Group’s 1550c a share ($13.83bn) takeover offer. ORG says the offer undervalues the company. ORG down 11c to 1604c.
  • Orica’s CEO has given a speech to investors. Main points are that annual profit growth should continue, cost pressures are continuing at every level, strong Aussie dollar will cut EBIT by $30m-$40m for FY08, and poor conditions in some end-use markets. ORG down 4% to 2390c.
  • Brokers liked the look of Ansell’s profit – Citi, UBS Warburg and GSJB Were all upped their target price on the stock. Citi say BUY, UBS are NEUTRAL and Were’s say HOLD. ANN up 30c to 1170c.
  • Seek has been downgraded by a few brokers this morning after their result yesterday. Credit Suisse downgrade to NEUTRAL from Outperform and Merrill Lynch maintained their UNDERPERFORM recommendation. SEK down 13c to 510c.
  • Macquarie Equities tell investors Not to BUY Babcock & Brown Power (BBP) after disclosures regarding their debt position and sale of its Tamar valley Power Station yesterday.

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

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