The market is down 44 having been down 61 at worst. Financials down 1.8%. Resources up 0.3% despite gains in BHP and RIO and US oil and energy stocks overnight – BHP and RIO are up 1.0% and 1.5%. Metals mostly down. Nickel stocks up on the back of rising nickel prices overnight. Energy stocks enjoying a 2-day jump in the oil price and coal seam stocks up on the back of a 25.5% spike in Sunshine Gas on a takeover bid from Queensland Gas, the fourth big deal in the Coal Seam Gas sector this year. Some brokers seeing it as a catalyst for the rest of the sector after recent falls. Loads of Results. Babcock & Brown MD resigns. Price down another 23% to 263c… down from a high of 3478c. BBW down 2.06%.

The Dow Jones had a good session — up 69. Up 105 at best. Down 58 at worst. Volatile trading – finished with a late surge. 6 out of 10 sectors up — light volumes. Fannie and Freddie fell another 27% and 22% to 18-year lows on fears of a government bailout that would nationalize the government sponsored entities. Tech sector up 0.3% – assisted by strong results from Hewlett-Packard. Dell up 2.17% and Apple up 1.33%. Hewlett-Packard posted 3Q earnings above expectations with strong year-over-year revenue growth — notebooks sales good and weak US dollar assisted. Up 5.65%. Consumer discretionary stocks down 0.6% on rising oil and further inflation concerns — Macy’s and Kohl’s down 3.2% and 2.21% on Goldmans reiterating the slowdown in consumer spending will hurt sales. Said the rally in department stores will end. The US dollar rose against major currencies.

  • Both BHP and RIO up in ADR form overnight, 4.56% and 5.72% respectively.
  • Metals mixed overnight — Nickel up 2.78%, Copper down 0.72% and Aluminium down 0.58%. Zinc was unchanged.
  • Oil price up $1.09 to $115.48
  • Gold down 60c to $812.40 after the Energy Department said crude oil inventories rose much more than forecast last week.
  • Bonds up with the 10 year yield down to 3.80% from 3.84%

Been a huge morning on the earnings front…

  • Qantas (QAN) — BELOW EXPECTATIONS — Announce a FY net profit of $969m, down on broker estimates. Credit Suisse expected $1.03bn, UBS Warburg $1,018bn. Oil price killed earnings. Declared a final dividend of 17c, Credit Suisse expected an 18c dividend, UBS Warburg 15c. QAN up 2%.
  • QBE Insurance (QBE) — GOOD — Report a 7% 1H fall in net profit to $859m. Analysts’ expected $846.1m. Lower returns on its investment portfolio and the strong Aussie dollar hurt earnings. QBE down 3.3%.
  • Lend Lease (LLC) — Announce a 47% fall in FY net profit to $265.4m, down from $497.5m last year. UBS Warburg expected $261m. Declared a final dividend of 34c, down from 42c last year. LLC down 1.2%.
  • Fairfax (FXJ) — GOOD — Announce an underlying FY net profit of $395.3, up 37.4% helped by the acquisition of Rural Press. Analysts’ expected $386.8m on average, JP Morgan $388.2m and Credit Suisse being the most bullish with predictions of $400.5m. Down 1.8%.
  • Santos (STO) has announced a 58% in 1H profit to $303.7m and a capital management strategy. It will undertake an off market share buyback of $300m and plans to construct a new 500 megawatt gas fired power stations. STO up 9.7%.
  • Amcor (AMC) — NOT GOOD — Announce a FY net profit of $258.8m, down 52%. Analysts’ expected $364.1m. AMC down 1.1%.
  • Cabcharge Australia (CAB) — SLIGHT BELOW — Announce a net profit of $59m, up 13.9%. UBS Warburg expected $61.5m, GSJB Were $61.1m. Declare final dividend of 17c, up from 15c last year. Down 8.8%.
  • Iluka Resources (ILU) said profit for the 1H fell 63% to $15.6m from $42m last year due to gas supply disruptions. Estimates its FY net profit will come in at $20m. No dividend was declared. ILU down 4.7%.
  • Downer EDI (DOW) — GOOD — Announce a FY net profit of $165.8m, UBS Warburg expected $152.1m. Up 4.7%.
  • Adelaide Brighton (ABC) — GOOD — Says 1H net profit came in at $47.7m (6.7% short of GSJB Were estimates of $51.1m). Up profit guidance for FY08. ABC down 1.1%.
  • Sonic Healthcare (SHL) — IN LINE — Report a FY net profit of $245m, up from $198m last year. Analysts’ expected $243m on average. SHL down 2.5%.
  • OZ Minerals (OZL) — MESSY — posted a 1H net loss of $543,000 compared to the $173m profit last year. On a pro-forma basis OZL realized a net profit of $70.9m. Down 9%.
  • PaperlinX (PPX) — IN LINE — announces a 9.9% fall in net profit to $72.3m. In line with expectations, GSJB Were forecasted $70.2m. Down 11.4%.
  • Babcock & Brown (BNB) — NOT GOOD — Has released its 1H net profit result and a strategic update. Stock down another 20% this morning. 1H net profit down 24% to $150.9m. No dividend. CEO Phil Green will step down but will remain on the board. He will be replaced by CFO Michael Larkin effective immediately. Michael Larkin says the company is too highly leveraged… clear message that he will be looking to offload a few assets to cut the debt. BNB down 23.7%.

Other news is…

  • Perilya announcement re Hedge book closure and sacking over half its staff and has to reiterate it is in a “sound financial position”. PEM up 4.4%.
  • Queensland Gas has made a friendly $890m (268c) takeover bid for Sunshine Gas which will have implications for the whole coal seam gas and LNG sector including BG’s bid for Origin. It is the 4th big Gas deal this year. QGC down 2% and SHG up 26.3%.
  • Most brokers maintain their BUY or OUTPERFORM recommendation on Crown despite their result yesterday not being too flash. Macquarie Equities expect it to OUTPERFORM, Merrill Lynch say BUY as do UBS Warburg. Down 1.8%.
  • Tomorrow we have results from the likes of Wesfarmers, IAG, Boral, Billabong, Caltex, Iress Technology and MYOB.

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

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