The market is down 100 on the back of a 345 point fall on Wall St and a 153 point fall in the market predicted by the SFE Futures this morning. It has rallied from the open having been down 142 at worst.

Financials down 2.6%. Resources rallying having been down 3.0% on the back of a rising US dollar and falling commodity prices — down only 1.5% now. Energy was down 2.5% on the back of another fall in the oil price — now down 2.0%. Property down 1.6%. Discretionary stocks underperforming the ASX 200 – down 2.1%.

Dow down 345. Down all session — down 357 at worst. All 3 indices in bear market territory again – all off more than 20% from their respective highs. High unemployment data fuelled concerns about tonight’s jobs numbers. The number of Americans collecting unemployment benefits hit a five-year high. Retail sales report negative suggesting consumers continued to cut their spending amidst higher oil and food prices in August. Bill Gross — manager of one of the world’s largest bond investment companies — said that the financial markets are witnessing a “financial tsunami” and a massive de-leveraging. Oil down 0.5% — down 6.5% for the week. Energy sector down. The US dollar continued to rise on fears of a global slowdown and concerns about Chinese growth. Resources index down 2.1% as oil, gold and copper slumped. The US materials index has officially re-entered bear-market territory having dropped over 20% from its May 16 record high. Financials finished on their lows — down 4.7%. Down 28% this year — worst performing sector year-to-date.

  • Both BHP and RIO down in ADR form overnight, 3.39% and 3.89% respectively. BHP down 28c to 3687c (hit a low of 3630c). RIO down 178c to 10980c (hit a low of $108.10).
  • Metals mixed overnight — Copper and Nickel down 1.8%, Zinc up 1.36% and Aluminium up 0.15%. Oz Minerals down 11c to 153c.
  • Oil price down for the 5th straight session — $1.39 to $107.99 after a lower-than-expected fall in US inventories. Woodside down 39c to 5606c.
  • Gold down $5 to $799.30. Newcrest up 4c to 2118c.
  • US Bonds up with the 10 year yield down to 3.62%.
  • The A$ has hit 81.02c today. The Yen has hit a 13 month high against the Euro with suggestions

Question of the Day — If the Ospraie $2.8bn commodities fund in the US has lost so much in just six weeks that it has had to shut its doors, just how many other funds are in the same position? Just how many funds have redemptions pouring in? How many funds are liquidating their leveraged positions in resources and commodities including selling illiquid Australian resources holdings built up over years of a bull market? The redemptions usually hit at the end of the Q…in other words the end of this month. Funds are selling in anticipation. Talk of more funds going under.

Quote of the Day — “This is not a flight to quality… it is simply a flight”.

Shane Oliver (AMP Capital) on the newswires today with the quote “We sit here complacently saying we’ll be all right because of China, but the evidence suggests that China is slowing as well. I don’t know if the commodity bubble has burst, but at the moment commodity prices are falling quite sharply, so a lot of the air’s coming out of the bubble”.

Other announcements:

  • Linc Energy (LNC) up 39% this morning on news it will sell its Teresa coal exploration permits to China’s Xinwem Minong Group for $1.5bn. Linc MD Peter Bond said, “This deal effectively underwrites Linc Energy’s GTL commercial aspirations over the coming years, taking the entire company to a new level of opportunity.”
  • ABC Learning (ABS) spokeswoman said their audited accounts are still not ready and won’t be released today. ASIC is also investigating potential violations of continuous disclosure laws. ABS still in a trading halt at 54c. The CEO says he is confident of the company surviving (gulp!).
  • ROC Oil (ROC) announces that they’ve received court approval for the merger with Anzon Energy – scheme to be implemented on the 22nd September. ROC down 4c to 112c.
  • United Group (UGL) announced its part of an alliance which has won a $250m 5-year rail signaling contract for the expansion of QLD’s state coal hauling network. UGL up 11c to 1400c.
  • Kagara (KZL) drilling results unearthed massive sulphide deposits at the Lizard Lounge project in WA and is set to significantly increase the resource. KZL down 12c to 305c.
  • Australian Wheat board (AWB) requests Moody’s Investor Services withdraw AWB Harvest finance P2 short term credit rating. AWB down 4c to 305c.
  • Gunns down 5c to 135c… this week they did a $336m institutional share issue at 150c. Ow. Down 42% on the month. Looks like they may struggle with their $91m retail issue at the same price.
  • Queensland Gas (QGC) posted its 3rd supplementary bidders statement for the recommended unconditional cash and scrip offer to acquire all Roma Petroleum shares. QGC down 16c to 366c.
  • Healthscope (HSP) set to work in close collaboration with Polartechnics and Genera Biosystems in developing and launching Polartechnics’ CerviScreen cervical cancer detector. HSP down 14c to 438c.
  • ANZ STEPS preferred securities suspended from the official quotation at the close of trading today pending exchange by way of conversion into ordinary shares on the 15th of September 2008.

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

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