The market is down 13. Been in and out of positive territory all day. Up 38 at best, down 18 at worst.
The US Senate has voted in favour of a revised draft of the $US700bn bill, 74 to 25 in favour. This time it included an increase in the level of government insurance for bank deposits and various targeted tax breaks. Some say that was the easy part. It will now go before the House of Representatives on Friday. The Dow Futures suggest a 20 point gain on Wall Street tonight at 12 noon.
Dow down 19. Up 32 at best. Down 219 at worst. Financials outperformed — up 2.2% — on the belief that a stabilisation plan would be voted through the Senate — albeit with a few amendments. Big gains among the majors — JP Morgan up 6.27%, Citigroup up 12.14%, Merrills up 5.53%. Bank of America up 9%. AIG up 18.62%. The NASDAQ down 1.07%. Warren Buffett invested $3bn in General Electric. GE will raise US$12bn in a public common stock offering and Berkshire Hathaway will buy $3bn in preferred stock yielding 10%. Berkshire will also get another $3bn in warrants at $22.25 within the next five years. He announced yesterday that Berkshire Hathaway had bought a stake in Hong Kong listed BYB Company, its shares jumped 42%. GE shares didn’t react the same way, it dropped 10% in early trading, the market shocked by the need to raise so much capital — but closed only 3.9% lower with the Buffett news. Resources were down. Oil down. Gold and Bonds were up.
- BHP down 1.23% in ADR form overnight, RIO up 1.90%.
- Metals mostly down — Copper down 3.26%, Zinc down 0.30% and Aluminium down 0.38%. Nickel up 0.71%.
- Oil price down $2.44 to $98.26 – The government’s weekly energy inventory report showed a larger-than-expected increase in crude inventories, and an unexpected increase in gasoline stockpiles.
- Gold up $6.50 to $887.30
- Bonds up with the 10 year yield down to 3.74% from 3.83%.
BHP Billiton CEO Marius Kloppers and his crew have happy faces this morning after the ACCC gave BHP Billiton the green light yesterday to have a crack at Rio Tinto saying the deal would not “substantially lessen competition in any relevant market”. BHP down 62c to 3215c and RIO down 233c from 9254c.
Australia trade balance has moved into surplus in August. Exports blitzed Imports. It is the largest surplus since June 1997. It shifted to a surplus of $1.36bn from a deficit of $697m in July. Economists expected a surplus of $200m. Exports up 6%, imports down 2% from the previous month. Citi have labeled the surplus a “cracker”.
Other news today…
- Despite the AFR reporting this morning that the Commonwealth Bank (CBA) has made a bid for BankWest, the bank announced it hasn’t made any takeover offers saying there in no current offer on the table, yet didn’t refuse speculation that they had a previous bid rejected. CBA up 28c to 4514c.
- Lend Lease (LLC) has upped its take in Brown & Brown Communities Group (BBC) to 41% but its CEO Greg Clarke says it doesn’t plan to undertake any further acquisitions in the short term. He also said he is confident of LLC achieving FY guidance and that its cash position has improved since June 30. LLC up 12c to 952c.
- Babcock & Brown Communities (BBC) down 3.5c to 43.5c despite the deal — some might be disappointed that LLC didn’t takeover the whole company.
- CBH (CBH) has made a new takeover offer for Perilya (PEM) in a hope of bringing together the Broken Hill zinc operations. CBH is offering 2.8 shares for every PEM share if PEM successfully sells its Mount Oxide operation; and 4.2 of its shares if it doesn’t. CBH up 4.11%, PEM up 22% to 33c.
- IBA Health Group (IBA) — iSOFT has won a $7.6m Lorenzo deal. IBA up 4% to 79.5c.
- Suncorp-Metway (SUN) up 4.7% to 1006c on talk it has received a number of informal offers. The Australian has reported that only 3 directors were happy to accept a takeover offer based on the two previous board meetings. SUN has apparently hired UBS Warburg to ward off unsolicited takeover bids from the big four banks.
- Harvey Norman CEO Gerry Harvey says he will cut the advertising and marketing budget by $60m to boost profit. HVN down 3c to 300c.
- PMP Ltd (PMP) has extended its print contract with ACP Magazines by 3 years on more favourable pricing terms and guaranteed volumes, but ACP said it would move its operations to its own Greenfield print site by 2011. PMP down 2.5c to 126c.
- Hastie Group (HST) has won a $55m contract win for Sydney’s Royal North Shore Hospital.
Broker Recommendations today…
- Merrill Lynch has cut its target price on AMP to 850c from 900c after lowering their 3Q earnings forecasts. They maintain their BUY recommendation and say, “With markets as they are and with consumer sentiment unlikely to quickly recover, flows could be moribund for an extended period.” AMP up 8c to 725c.
- Credit Suisse cut their recommendation on Crown (CWN) to Neutral from Outperform due to recent share price appreciation. CWN down 18c to 845c.
- ABN AMRO upped their recommendation on Sonic Healthcare (SHL) to Buy from Hold due to recent share price appreciation. ABN says SHL is trading at 13.8x, a 17% discount to the lower end of its historical trading range of 16.6x. SHL up 11c to 1384c.
- JP Morgan has cut its target price on Fortescue Metal (FMG) by 47% to 541c from 1032c saying FMG has altered the timing of its expansion plans in response to the global credit crunch. FMG down 32c to 499c.
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