The market has started the week off well and is recovering most of Friday’s heavy losses — up 210 or 5.3% – blitzing the 27 point gain the SFE Futures predicted this morning. Since Wall Street closed on Friday, 15 European leaders in a unified approach have agreed to guarantee all new bank debt until end of 2009 and prop-up any big lender to prevent any more collapses. Australia has also guaranteed interbank lending and bank deposits (unlimited) — all central banks had to follow suit or risk being frozen out of interbank markets by other countries that have guarantees. There is also a comment this morning from the Chinese Central Bank saying they will promote rapid growth.

The Dow closed down 128. It was a wild session. Up 322 at best. Down 697 at worst. A massive 1000 point trading range. 7+% drops both early and late in trading. Big gains late in the session (Dow rose 790 points in half and hour) on the possibility that further government support and a globally coordinated plan to increase interbank liquidity, would be announced over the weekend at the G7 and G20 meetings. Yesterday the US government agreed to start buying stock in financial institutions. The NASDAQ closed slightly up.

On the back of all that THE EURO ROSE THE MOST IN THREE WEEKS against the US dollar which suggests a reversal of the “flight to safety” in US bonds … a sign that fear has subsided. DOW FUTURES UP 231 POINTS. There is every indication that the Euro move may work and is bullish for all markets.

  • Both BHP and RIO down in ADR form on Friday, 3.7% and 2.34% respectively. Both down 7.9% and 10% in the UK.
  • Metals got smashed on Friday — both Copper and Nickel down 9.4%, Aluminium down 4.22% and Zinc down 3.54%.
  • Oil price down a big $9.06 or 10.5% to $77.44 on concerns the economic crisis will reduce demand for the commodity.
  • Gold down $27.50 to $859.
  • US Bonds down with the 10 year yield up to 3.87%.

Suncorp-Metway has released an update saying it is “assessing the implications for the potential sale of its banking and wealth management options” and will provide an update to the market in due course. According to the AFR, it received bids from ANZ, CBA and NAB on Friday, but only ANZ made a solid offer — and it was only at 1x net assets. Now with the government’s decision to guarantee bank deposits, SUN may look to dig out a higher offer. SUN up 18c to 945c.

Making the news today…

  • CSL Limited (CSL) received a request from the US’s Federal Trade Commission for more information on its proposed $3.1bn merger with Talecris Biotherapeutics – the FTC hasn’t reached a conclusion on the merger yet. CSL down 3c to 3663c.
  • FKP Property Group (FKP) has entered a trading halt in relation to negotiations on significant transactions. FKP rejected a $1.3bn takeover offer from Lend Lease in June.
  • Valad Propert Group (VPG) has scrapped its earnings guidance and interim distribution on market concerns about its subsidiaries. VPG up 20.48% to 10c after last weeks massive fall.
  • Australian Wheat Board (AWB) will deliver a $604m FOB payment to Australian wheat growers. AWB up 8c to 233c.
  • Stockland Group (SGP) says its $26.9m Aevum stake purchase is to be funded through debt and will be EPS neutral in FY09. SGP up 10.22% to 496c.
  • Transurban’s (TCL) September quarter traffic and revenue data showed CitiLink daily revenue up 4.5% on-year. Hills M2 revenue up 5.6% on-year. Westlink M7 revenue up 12.5% on-year. TCL up 24c to 511c.
  • Macquarie Infrastructure Group’s (MQG) September quarter traffic numbers were down — hit by weak economic conditions. UK M6 Toll traffic down 12% on-year. Australian Westlink M7 up 6.5% on-year. US 407 ETR traffic down 1.1% on-year. US Indiana traffic down 13.8% on-year. MQG up 9.05% to 3110c.
  • Queensland Gas (QGC) bid for Sunshine Gas is now unconditional. QGC up 16.6% to 274c.
  • Aspen Group (APZ) has entered a trading halt.
  • Deep Yellow Limited (DYL) has made amendments to its Uranium JV with Matrix Metals Limited. DYL up 17.39% to 13.5c.
  • Lots of talk in the financials sector — according to The Australian’s Michael West, the ANZ Bank and the NAB might be merging.
  • Westfield (WDC) has been upgraded by Macquarie Equities to OUTPERFORM due to recent share price depreciation. They have a 1670c target price saying the stock is trading on prospective dividend yield of 7.2% with growth of about 3%”. WDC up 9.74% to 1622c.
  • Merrill Lynch cut their target price on Brambles (BXB) to 937c from 953c despite maintain their BUY recommendation and saying the agreement with Wal-Mart is “better than expected” indicating “CHEP’s business model in intact”. BXB up 33c to 773c.
  • Macquarie Equities maintain their UNDERPERFORM recommendation on Minara (MRE) saying the falling nickel price and rising cost pressures has put the company’s balance sheet under pressure. They maintain their 112c target price. MRE up 4c to 80c.
  • It is a national holiday (Columbus Day) in the US tonight, but the US stock market is open. The Dow Futures are suggesting a 264 point gain on Wall Street tonight.

MARCUS PADLEY is the Author of the MARCUS TODAY Daily Stockmarket Newsletter.

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