Our market has made up all of yesterdays losses – up 181 or 4.3% – and is finishing the week strongly on the back of a strong rise on Wall Street overnight. Financials going gangbusters – up 7.7% – helped by Macquarie Group’s 36% rise today and Babcock & Brown putting on 16.5%. The NAB is up 15.2%. This is unprecedented volatility in our markets. Fundamentals have gone out the window. Logic and science can’t explain the movements induced by fear and panic.

Wall Street closed up 410 or 3.86%. Up 467 at best. Down 148 at worst. Up 400 points in the last hour of trading. Biggest rise in the market in 6 years on talk the Treasury will set up a “permanent plan” to absorb bad debts using a vehicle similar to the Resolution Trust Corp. that was structured in the 1980’s and 1990’s during the savings and loan crisis. The UK has temporarily banned short selling of financial companies, the US is looking to do likewise. Global central banks injected $225bn into the global financial system overnight. Morgan Stanley and Washington Mutual still trying to finalize buyers or merger partners. Gold up again.

  • The SFE Futures suggest a big 124 point rise this morning.
  • Both BHP and RIO up in ADR form, 4.87% and 2.24% respectively.
  • Metals all down – Nickel down 1.87%, Copper down 0.62% and Zinc down 0.53%. Aluminium down 0.24%.
  • Oil price up 11c to $97.50 on the back of Nigerian militants stepping up attacks on oil infrastructure.
  • Gold up a big 5.5% to $46.50.
  • Bonds down with the 10 year yield up to 3.53% from 3.42%.

GSJB Were have come out with this statement on their website. “We believe this period of turmoil will present some excellent opportunities in the equity markets for long term investors. Investors should remains focused on businesses with strong franchises and balance sheets and be selectively increasing their exposure during this period of turmoil”.

Citi say Macquarie Group (MQG) has been bit by inaccurate perceptions and that funding positions have forced the sell off in its shares. They consider MQG’s balance sheet as “solid”, its funding position favourable, its capital position as “comfortable” and labeled refinancing risk as “manageable”. They maintain their HOLD recommendation and 3626c target price but do warn that, “While management remain on the front foot with respect to these issues, we expect the jittery market will continue to take its leads from offshore events.”

In the news today…

  • The NAB also hit an 11 year low and is considered as the most likely of the big 4 banks to cut its dividend and raise capital if it declares further writedowns. NAB having a blinder – up 15% to 2253c.
  • GrainCorp (GNC) expects promising harvest this year with grain receivals across the three main eastern states totaling 7.5-10m tonnes. GNC down 10c to 695c.
  • According to the AFR, Coca-Cola Amatil (CCL) is in talks with possible partners to split the Danone’s Frucor unit in order to avoid regulatory issues. CCL up 10c to 908c.
  • Straits Resources (SRL) says it will not proceed with the dual listing and further selldown of its Singapore listed subsidiary Straits Asia Resources. SRL down 12c to 346c.
  • BHP Billiton boss Marius Kloppers says BHP’s takeover offer for Rio Tinto is not affected by the recent market fallout saying, “It’s a deal for all seasons”. BHP up 2.3% and RIO up 4.4%.
  • Vision Group (VGH) announced late yesterday that CEO Neil Rodaway will leave at the end of December. VGH down 14% to 130c.
  • Merrill Lynch expects Sigma Pharmaceuticals (SIP) to announce a 1H net profit of $32.9m when it announces its 1H result on Monday. They have a Underperform recommendation and 135c target price.
  • A large 69.5m parcel of Macquarie Infrastructure Group (MIG) has traded at 195c a share this morning.
  • GSJB Were says Oz Minerals’ (OZL) decision yesterday to cut zinc output and lift copper production as its Golden Grove mine a positive. They maintain their BUY recommendation and 320c target price. OZL up 6c to 149c.
  • Talk is that Warren Buffett’s Berkshire Hathaway may elect to pick up some bargains from AIG as the insurer tries to sell assets to pay the $85bn loan. Maurice Greenberg, who ran AIG for 40 years until 2005, may also have a nibble.
  • Incitec Pivot is now trading ex its 1 for 20 share split. IPL down 2c to 663c. Macquarie Equities maintain their Outperform recommendation and 944c target price.
  • The Aussie dollar against the US is slightly lower at 80.33c.

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