Our market is up a massive 190 or 3.8%. It was an unusual start to the day with the market opening 10:40am after ASIC banned short selling for 30 days effective this morning. They will review the practice once the 30 days are up. ASIC originality announced on Friday that all “naked” short selling (investors selling shares they don’t actually have) would be banned but upgraded the restrictions to all stocks (not just financials like in the US, Canada and Britain) because of the risk of hedge funds going go to town on our relatively small market. Babcock & Brown was up 110% in early trading.

Another big session on Wall Street on Friday — Dow closed up 368. Up all session — up 464 at best. Steepest two-day rally since the aftermath of the 1987 crash on the back of the Fed’s plan to buy $700bn worth of mortgage debt and the SEC’s decision to restrict short selling in financial stocks. Morgan Stanley and Goldman Sachs still looking at various alliances to stay alive. Oil up. Gold down. What a difference a week makes — Lehman Brothers went into bankruptcy, Merrill Lynch was bought by Bank of America, the world’s biggest insurer AIG had to be rescued by the Fed and the government came up with a plan to solve what is the world’s worst financial problem. Despite the week’s early falls, the Dow ended up closing only 0.3% lower for the week. The NASDAQ put on 3.4%.

  • Both BHP and RIO up in ADR form on Friday, 9.59% and 14.71% respectively.
  • Metals all up – Copper up 4.64%, Zinc up 3.79% and Aluminium up 1.64%. Nickel up 1.32%.
  • Oil price up $6.55 to $104.50 – the price is up $13 in the past 3 days but analysts’ warn it could resume its downward trend.
  • Gold down $32.30 to $864.70 breaking a 2 day $116 rally after the government announced a plan to ease the credit crisis.
  • Bonds down with the 10 year yield up to 3.81%.

Macquarie Group — Both Credit Suisse and ABN AMRO have cut their target prices’. CS cut their target price to 5500c from 6500c to reflect changes to EPS estimates. They maintain their OUTPERFORM recommendation. ABN AMRO also cut their target price to 6400c from 7600c but also maintains their BUY recommendation. MQG up 8.9% today to 3910c.

Resources up a huge 7.4% this morning – BHP Billiton up 9% to 3862c and RIO Tinto up 5% to 10650c. RIO now trading $25 below BHP’s 3.4-for-1 takeover offer. Financials up 5% with ANZ putting on the most among all the major banks — up 8.2% to 1915c.

Making the news today…

  • Sigma Pharmaceuticals (SIP) announced a net profit of 1% to $30.7m compared to $30.3m last year. Merrill Lynch expected $32.9m, GSJB Were $32.1m. Revenue up 2% to $1.47bn and declared an interim dividend of 3c, unchanged from last year.
  • David Jones (DJS) is due to announce its FY result on Wednesday. GSJB Were expects a profit of $136.4m, up 25% from last year and a final dividend of 13.5c. They maintain their HOLD recommendation and 446c target price.
  • Seven Network (SEV) down 4% to 663c after announcing its 1H profit is likely to be down 40-50% due to realized losses to its investment portfolio. Not the best time to be invested in the Australian equities market. It has so far realized $14m in losses with more to come. Its share buyback begins today.
  • JP Morgan has valued AGK’s 3.6% stake in the liquefied natural gas project in Papua New Guinea at $700m but did say it could fetch between $800m and $1bn. AGK say there are a number of interested parties.
  • Aquila Resources (AQA) down 3% despite talk that China’s Citic Group is considering bidding for some coal or iron ore assets. AQA are in talks with interested parties.
  • Macquarie Equities has upped its recommendation on Fortescue Metals (FMG) to Neutral due to the recent sell off. They say, “We continue to see ongoing risk in the ramp-up schedule and see better risk reward metrics on offer from the global diversified miners” and have a 668c target price. FMG up 25% to 714c.
  • Qantas (QAN) is considering delaying its Frequent Flyer program float and announced its revenue seat factor in July declined by 1.6% to 82.2% from 83.8% a year ago.
  • Albidon (ALB) is in a trading halt pending a hedge book restructure.
  • Value investing fund manager Clime Capital chaired by Roger Montgomery said it had a dip into the market last week due to the recent sell off after holding 60% of its portfolio in cash.
  • Aussie dollar struggling today, down to 83.02c.
  • Dow Futures are suggesting a 116 point fall on Wall Street tonight at noon.

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