The market is down 28 slightly underperforming the 29 point fall predicted by the SFE Futures on the back of the 171 point fall on Wall St. US markets shut tonight. Financials down 0.5% and Resources down 0.7%. Property down 1.0%.

Dow down 171. Down all session — closed on low. All 10 sectors down. Personal income and consumer spending down. Techs fell the most — down 2.5% — major player Dell down 13.8% on results missing consensus. Oil up 2.7% early on but finished flat – up 0.9% for the week. Hurricane Gustav still a concern as it heads into the Gulf. Resources down. Financials down with Fannie Mae and Freddie Mac down 14% and 15%.

  • Both BHP and RIO down in ADR form, 2.07% and 2.17% respectively. BHP down 16c to 4124c. RIO down 232c to 12520c.
  • Metals all down on Friday — Nickel down 3.63%, Copper down 2.32% and Zinc down 1.92%. Aluminium down 1.77%. Oz Minerals down 2.0%.
  • Oil price down 3c to $115.55 — the price is expected to rise in coming days. Royal Dutch Shell, BP and other oil companies have completed evacuations and shut down production on the weekend as Hurricane Gustav intensified around the petroleum-rich waters of the Gulf of Mexico. Woodside down 1.8% or 112c to 6193c.
  • Gold down $2.10 to $831.20. Newcrest down 79c to 2661c.
  • US Bonds down with the 10 year yield up to 3.83% from 3.79%.

Macquarie has research out on Fortescue Metals after its $450m of “funding commitments” and preference share issue which they say “doesn’t make a dent in their requirements” saying it is a “baby step with more to come”. They say “We are maintaining our Underperform recommendation in spite of the pull back in the FMG share price from a high of $13.15ps in June to close at $7.65ps on Friday. The share price has begun to approach our price target of $7.40ps, however, we believe our DCF-based price target factors in an extremely aggressive production scenario which sees FMG reach production of 135mtpa in FY12”. FMG up 3% today or 23c to 788c.

  • Australian Q 2 Current Account narrows to $12.77bn against forecasts of $11.9bn. It is down from $19.96bn on a big lift in resources exports.
  • Babcock and Brown Power down 15.8% after a price target cut by Merrills following their poor results on Friday. Babcock and Brown Infrastructure and Babcock and Brown Wind both down 15% and 4.9% on price target cuts by brokers.
  • Alumina down 9.6% after going ex entitlement to their rights issue and completing a $644m institutional offer and bookbuild. Citigroup ups its commodity and currency forecasts and increases target prices for Alumina, OZ Minerals, Lihir, ERA, Fortescue and Iluka.
  • Allco Finance Group (AFG) down 3.9% after Citigroup downgraded to SELL and after results on Friday. Rubicon America Trust fall 29% after having an asset sale terminated.
  • City Pacific First Mortgage up 10.2% on sound FY operating profit despite a challenging year.
  • Straits Resources (SRL) down 1% after it posts a preliminary $6m in net losses for the FY. EBITDA $94.2m.
  • A few ex dividends — Woolworths down 71c having gone ex-dividend 48c. BHP down just 15c having gone Ex 46.9c. Woodside down 113c having gone ex dividend 80c. GPT up 3c having gone ex dividend 4.2c.
  • RBA Meeting tomorrow. There is a 95% chance of a 25bp interest rate cut. Wayne Swan putting pressure on banks to follow suit without delay. Wizard Home Loans grabs the limelight by cutting their rate 25bp over the weekend.
  • The A$ is on an 11 month low as the US dollar perks up and ahead of the rate cut expected tomorrow.
  • UBS analyst said that the earnings results have been “respectable” and that FY09 earnings estimates have been downgraded by a moderate degree – says the market is cheap on 11.9x FY09 earnings.
  • The Sunday Times reported that both the CBA and the NAB have been in talks with HBOS about buying their BankWest Australian business. NAB down 1.1%.
  • The Australian reports ahead of the WA election this week that the Liberals don’t believe the BHP/RIO takeover is in the state’s interest and would remove the royalty concessions currently enjoyed.
  • Credit Suisse says that Macquarie Group is “financially sound but faces reputational challenges.” Says they won’t suffer the same loss of confidence as Allco and Babcock and Brown. MQG up 1.8% today. 

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

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