Bit of an uneventful day – we are down 12. Down 52 at worst. Resources struggling – BHP and RIO both down over 3%. Both suffered a setback in their battle to keep other miners off its iron-ore rail lines in the Pilbara region after the High Court said they had to share it with its competitors. Financials doing OK, so are Property Trusts.

The Dow Jones also took a breather overnight – down 29 – Up 74 at best. Down 101 at worst. Concerns are that Congressmen will derail the government’s plan for the US$700bn bailout of Wall Street. Bernanke warned the US is facing “grave threats” and that the credit crisis has started to cause damage to household and business spending. Oil down. Gold up. Tech stocks up. Warren Buffett’s foray into Wall Street sends a clear signal about his solid belief in Goldman’s as being a quality company, and would suggest he believes the Fed and Treasury will stabilize the financial markets, but traders are still very cautious. Existing homes sales fell 2.2% to an annual pace of 4.91m units – the biggest drop ever in the month of August. The NASDAQ was the only major index to close higher.

  • BHP down 1% in ADR form overnight, RIO up 0.64%.
  • Metals mostly down overnight – Copper down 0.94%, Aluminium down 0.28% and Nickel down half of a percent. Zinc bucked the trend closing up 1.15%.
  • Oil price down $1.01 to $106.84 despite militant threats in Nigeria and OPEC’s decision to cut production earlier in the month adding to supply concerns.
  • Gold up $3.80 to $106.84.
  • Bonds down with the 10 year yield up to 3.81% from 3.80%.

Front page of The Australian says the National Australia Bank will utilize the US government’s bailout plan to offload its $1bn exposure in the US property market. NAB says there isn’t enough detail about the package yet to decide whether it will be needed. NAB unchanged at 2560c.

Making the news today…

  • Suncorp-Metway (SUN) up 5% on talk that Commonwealth Bank of Australia (CBA) could potential buy its banking operations to be worth around $4bn and QBE Insurance (QBE) making a takeover offer for all of SUN with the plan to then split the assets.
  • Babcock & Brown (BNB) having a blinder – up 43.5% to 247c – on takeover speculation. The Short selling ban has also helped its cause.
  • Mirrabooka Investments (MIR) says it may be 2 or 3 years before the uptrend in the market continues. Although it is a difficult period, it does provide a rare buying opportunity for patient investors.
  • Speculation that ABC Learning could get bought out by majority shareholder Temasek. The stock last traded at 54c. ABC Learning shares have been suspended for a 24th consecutive day – CEO Eddie Groves did say the company would announce results by the end of the month. Not to long to go now.
  • Brickworks (BKW) announced a FY net profit of $101.5m, slightly better than what analysts’ had expected. Management say they can’t see any improvement in earnings any time soon. BKW down 0.08%.
  • UBS Warburg cut their recommendation on David Jones to Neutral from Buy after the stock outperformed the market by 50% since July. They have a 465c target price.
  • Felix Resources (FLX) announced the new laws in NSW have cleared the way for the development of its Moolarben coal mine. FLX up 5.11%.
  • Woolworths (WOW) is being talked up as a potential bidder for Mitre 10 as the hardware retailer said it was looking for cash or a buyer. WOW up 1.59%.
  • Ridley Corp (RIC) has announced a loss of $39m on the sale of its 69% stake in Canadian unit Ridley Inc for $93m to Fairfax Financing Holdings. RIC up 6.7%.
  • United Group (UGL) unchanged as it announces its subsidiary has won new contracts worth $US123m during July and August.
  • Qantas (QAN) has denied talk it will need a capital raising after it deferred plans for its Frequent Flyer IPO. QAN up 0.62%.
  • We have a heap of economic data in the US tonight to keep us busy: Durable Goods Orders, New Home Sales and Weekly New Unemployment Claims

MARCUS PADLEY is away on Holidays.

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