The market is down 104. That comes on the back of a 241 point fall on Wall St. Our market is emulating the US this morning with financials down 3% and property sector down 4.1%. Resources down but outperforming. We are waiting for the RIO results due on the close this afternoon. Plenty of results. Woolworths down 1.6% on theirs. Suncorp-Metway down 2.7% on theirs. Emeco Holdings down 9% on theirs.
Bad night on Wall Street – the Dow Jones closed down 241 – Down all session – down 265 at worst. Most of the US problems were in financials with the sector down 3.1%. A small bank fell over, AIG was downgraded, the Lehman bid approach by an Asian Bank was abandoned and Morgan Stanley cut their year end target for the S&P 500 on the back of an expectation of continued losses from the bank sector. Stronger than expected Existing Home Sales numbers in the US turned out to include a high level of foreclosures….nothing to get excited about. UK closed last night. Resources and energy down but outperformed. Close to 95% of stocks down – biggest drop in a month ending the 3-day advance in US indices. Financials down 3.1% – Materials sector down 2.3%. Alcoa – world’s largest aluminium producer – fell 2.66%. Consumer discretionary stocks down 2.4%. Retailers and hotel operators and other companies that rely on the disposable incomes of consumers all down on elevated oil prices and weak housing numbers showing household balance sheets are struggling and the NASDAQ fell 2%. London was closed overnight. Quote of the Day – “Alan Greenspan’s smartest move was retiring before his chickens came home to roost”
- Both BHP and RIO down in ADR form overnight, 1.68% and 0.42%. Closed in the UK.
- Metals all unchanged – LME closed overnight.
- Oil price up 37c to $114.85 after Tropical Storm Gustav formed in the Caribbean.
- Gold down $7.80 to $821.70
- Bonds up with the 10 year yield down to 3.79% from 3.87%.
Lots of profit results this morning…another four days until our lives go back to normal.
- SUN – Suncorp-Metway – IN LINE – Post a 47.7% fall in FY net profit to $556m, slightly ahead of its guidance for a net profit of $525m-$550m. Credit Suisse expected $532m and GSJB Were $540m. Reiterated FY09 guidance. SUN down 2.7%.
- FGL – Foster’s Group – IN LINE – Announce an 88% fall in FY net profit to $111.7m on the back of a $602m writedown of its global wine business. Before significant items, net profit fell 0.4% to $713.2m, in line with analyst forecasts. It was their first 6 month loss in 16 years. FGL up 1.7%.
- WOW – Woolworths – IN LINE – Reports a 26% increase in net profit to $1.63bn, slightly ahead of the $1.62bn analysts expected. The result was ahead of management’s guidance of net profit growth of 21%-25%. Revenue up to $47.16bn. Declared a final dividend of 48c, up from 39c last year. WOW down 1.5%.
- FLT – Flight Centre – SLIGHTLY UNDER – Announce a 18% rise in net profit to $143.2m, a little under the $147.6m analysts’ had expected. Profit before tax $212.9m, in line with guidance. FLT down 3.2%.
- EHL – Emeco Holdings – AS EXPECTED – Net profit down 9.6% to $67.5m, in line with guidance of $65m-$75m but nearer the bottom end given by management in February. EHL down 8.7%.
- VPG – Valad Property Group – IN LINE – Announced a net loss of $248m, compared with a $109.1m profit last year on the back of $247m writedowns of goodwill European operations. VPG unchanged.
- BLY – Boart Longyear – GOOD – Announce a 1H net profit of $US112m, up 50% and slightly higher than the $US107.8m GSJB Were expected and the $US105m Merrill Lynch anticipated. Declared a 2.3c dividend. BLY up 0.5%.
- SDM – Sedgman – GOOD – Reported a NPAT of $23.4m, up 12% from last year. Good outlook statement. Solid balance sheet, with Net Debt of $19.7m. Interest coverage ratio of 14.5x. Down 2%.
- APA – APA Group – reported an 18% rise in FY net profit to $67.2m and say “barring unforeseen circumstances” distributions will rise at least 5% in current fiscal year, fully covered by operating cash flows. Up 0.3%.
- MGR – Mirvac Group – Announce a 1H net profit of $171.8m, down 69%. Revenue down 5.8% to $2.13bn. Pay a final dividend of 8.23c, up from 7.98c last year. Down 3.5%.
- MCG – Macquarie Communications Infrastructure Group – Net profit up to $134.5m but booked a loss of $103.4m from ordinary activities, compared to a $121.1m profit last year. Pay a final distribution of 23c. Down 1.0%.
- Babcock & Brown Infrastructure escapes unhurt after results with a Full Year loss of $51m but a 42% rise in EBITDA. Dividend cut from 7.5c to 2.5c. Pretty much as expected. BBI unchanged at 63.5c. It is down from a high of 203c.
- Alumina announced a deeply discounted 5 for 19 $910m share issue at 300c.Now 425c. $592m institutional placement. $318m retail offer. $549m helps pay for the $1.2bn capex blow out on their Alumar refinery expansion. They will be in a trading halt until Monday.
- Great Southern Limited (GTP) up 14% after announcing their strategic review including cost cutting and reorganization.
- Bluescope (BSL) has sold its Tahaora mineral sands business in NZ for NZ$250m. Down 2.7%.
- Four brokers upped their recommendation on Ramsay Health Care (RHC) after yesterdays profit announcement. Citi have a 1216c target price. RHC down 2.24%.
- The Norges Bank has turned up with a substantial shareholding (5.11%) in Babcock & Brown Power (BBP). Someone’s buying it then. BBP down 4.6%.
- Marion Energy (MAE) announced drilling is to commence at Clear Creek, the Utah Gas project. MAE up 2.4%.
- Fairfax Media (FXJ) says it plans to cut up to 550 jobs or 5% of its full time workforce. It will book a one-off charge of around $50m for redundancy and associated costs for the job cuts. FXJ up 5.6%.
- Leighton Holdings (LEI) has dispatched the prospectus for its entitlement offer. LEI down 3.1%.
Tomorrow we have another busy day on the reporting front with the results from Westfield Group, Minara, Macarthur Coal and Woodside Petroleum. See the website today for the mass of research post results in the last week – go to the Broker Archive link on the “Broker Stuff” page for over 2,000 broker recommendations in the last year showing the performance since the recommendation….a lot of them miserably embarrassing considering the Bear market and the inability of brokers to write the word SELL.
MARCUS PADLEY is the Author of the MARCUS TODAY Daily Stockmarket Newsletter.
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