The market is down 94 – was down 130 at worst – not quite as severe as the 164 point fall predicted by the SFE Futures this morning. Resources doing most of the damage. BHP and RIO down about 5% taking 40 points off the index. FMG down 7%. Oz Minerals down nearly 7%. The A$ has slipped under 80c and is the main driver for our market as international institutions get stuck in the door trying to get out of five years of A$ and Resource sector strength. Even BHP and RIO are reasonably illiquid in a global sense, you can imagine what happens when these “Man in the Moon” investors try to get out of the 2nd tier stocks like Fortescue and Oz Minerals. Its carnage.
Dow down 280 . Up 67 at best. Closed on its lows. After the 289 point rally the day before the US market has become a random joke. Volatility is a sign of uncertainty. Seems the US markets sobered up to realise the Fannie Mae and Freddie Mac bail out doesn’t get them out of the woods on the credit market related losses, the housing market downturn, the recession or the need for financials and consumers to de-leverage. Financials fall hard – down 6.6%. Lehmans fell 45%. Worse-than-expected July Pending Home Sales. Oil fell 4.5% and went under $100, Resources belted – BHP and RIO down 8%. Energy sector down 6.4%. Materials down 4.6%. Metal prices all down. Gold down on the continued US dollar ascent – USD up 1.74% against the Aussie. The VIX volatility index was up 12.5%.
- Both BHP and RIO down over 8% in ADR form overnight.
- Metals all down overnight – Zinc down 2.86%, Nickel down 1.85% and Copper down 1.92%. Aluminium down 1.77%.
- Oil price down $3.12 to $103.23 – below $104 for the first time since April – on the belief that Hurricane Ike will not cause any disruptions. Also in Vienna, OPEC’s President said the cartel wouldn’t cut production. Woodside down 130c to 5512c.
- Gold down $10.50 to $792.00. Newcrest down 92c to 2030c.
- US Bonds up with the 10 year yield down to 3.57% from 3.68%.
- September consumer sentiment up 7% from August on the back of the cut in interest rates and lower fuel prices. Sentiment at 92.2 still below the 100 mark which separates pessimists from optimists.
Making the news today…
- Aquarius Platinum (AQP) said that operations relating to trackless machinery at Marikana and Kroondal has resumed this morning. The stock is down 47.9% in the past quarter. Down 10% or 91c to 829c this morning.
- David Jones (DJS) has decided to commit to a new store in Newcastle expected to open in 2012. The new store will be part of GPT Group’s proposed $500m central business district redevelopment. DJS down 3c to 408c.
- It was Brambles yesterday that reassured investors that all is well on the earnings front, today it’s Suncorp-Metway (SUN). They have announced that it remains on track to meet its 2009 earnings guidance for each of its divisions. BXB down 4c to 824c and SUN down 3c to 1064c.
- Foster’s Group (FGL) outperforming thanks to the strong US dollar – down only 6c to 563c. It has said that for each 1USc change in the $A/$USD exchange rate the impact on the wine division is $5.3m. There is also talk that Deutsche Bank has been buying the stock for someone accumulating a stake.
- Nexus Energy (NXS) has agreed to sell an interest in two exploration permits for $US309m to an unnamed party. They will pay $US275m in cash and will fund NXS’s costs for 3 wells in one of the permits for US$34m. Up 1.5% this morning.
- BG Group said it will not extend its bid for Origin Energy and have conceded defeat to ConocoPhillips. ORG down 63c to 1677c.
- Seven Network (SEV) shareholders have approved a share buyback plan at its EGM held this morning. SEV down 3c to 816c.
- Merrill Lynch have upped their target price on Sigma Pharmaceuticals to 135c from 125c saying it may sell its Herron brand or other over-the-counter products. SIP down 2c to 144c.
- UBS Warburg says Westfield Group (WDC) is their preferred pick in the resource sector saying they are enjoying strong relative performance as a result of confidence in its business model. They say BUY and have a 1982c target price. WDC down 10c to 1772c.
- Riversdale Mining’s (RIV) coal resource in Mozambique upgraded to 2.1bn tones. Down 40c to 848c.
- Alliance Resources (AGS) announces high grade drilling intercepts at its Four Mile Uranium JV. AGS down 1c to 81c.
- Beach Petroleum (BPT) resume exploratory drilling in the SA Cooper basin. BPT down 3c to 94c.
Newcrest Mining (NCM) has made a few management changes. Down 4.5% today with Lihir down 7.1%.
Ausdrill (ASL) wins a $300m contract expansion from Fortescue Metals. Says committed work in hand is in excess of $1bn. ASL unchanged.
MARCUS PADLEY is the Author of the MARCUS TODAY
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