The market is having a good day — up 112 at midday — on its high. Resources flying up 5.6% led by the big boys, BHP up 6.8%, RIO up 8.8% and FMG up 7.3%. Good day overall — much needed.

Dow up 413. Up all session — finished on upward trend. Surged in the last half-hour. Big drop in the VIX Volatility index (which is good). Credit markets are on the improve and Bernanke told the Budget Committee that a second fiscal stimulus plan should be introduced to get consumers, businesses and home buyers spending. US dollar up against the Euro. A$ up against the US dollar.

Financials underperformed — up only 2.8% — Merrills up 6.45%, Goldmans up 6.3%, Bank of America up 5%, on the lower lending spreads. Utility sector was up 8.1% — Utility Excelon made a bid for NRG Energy — $6.2bn in stock. NRG up 29% — the most since its bankruptcy in 2003. Energy sector was up 11.2% — helped by oil up 3.8% and better-than-expected results from Halliburton. Exxon up 10%. The retail sector was down 3.4% — American Express up 4.37% and another 7.8% afterhours on 3Q profits topping estimates. Industrials down 2.1%.

  • Both BHP and RIO up in ADR form overnight, 12.4% and 15.4%. Both up 8.82% and 13.1% in the UK.
  • Metals all down — Copper, Nickel and Zinc all down 2.40%, Aluminium down 3.41%.
  • Oil price up $2.21 to $74.11 — Chakib Khelil, president of OPEC, said that he plans to announce a “substantial” output cut at an extraordinary meeting that begins Friday in Vienna.
  • Gold up $2.30 to $790
  • US Bonds up with the 10 year yield down to 3.84%.

Credit markets are on the improve. The LIBOR and TED Spread down. The 3M LIBOR spread coming down quite rapidly, from 330bp to 230 a month ago. Still high but a lot lower and heading in the right direction suggesting we are coming out of the worst of the credit crisis.

The NAB’s results are out. They are in-line with expectations and guidance. No disasters. Outlook a bit cautious. Cash profit fell 10.7% to $3.92bn — in line with guidance. 2H Cash earnings fell 28% to $1.663bn. No real guidance provided apart from painting a pretty bleak picture for the global economy. Stock down 40% so far this year, underperforming the 35% drop in the overall market.

ASIC has extended its ban on covered short-selling on non-financial stock for a further 28 days with the ban on financial stocks to be continued until January. They say financial markets remain fragile and that they would reopen covered short sales gradually.

Busy day today…

  • Woolworths (WOW) has surprised on the upside with its 1Q sales numbers — up 9.7% with like-for-like food & liquor sales up 6% — ahead of analysts expectations of 5.7%. Suggests it continue to take market share from Coles, as Wesfarmers attempt to restructure the business. WOW maintain their guidance for FY sales in the upper single digits.
  • Cochlear (COH) CEO Chris Roberts has reassured the market it is well placed to weather the global credit crisis pointing to its strong balance sheet that contains low debt and its positive cash flow. The weaker Aussie dollar works in their favour with 90% of its sales earned in overseas markets. It expects earnings growth to be skewed to the 2H and is on track for 10-20% core earnings growth.
  • Harvey Norman (HVN) has announced weekly sales data hoping to give guidance as to what is “really happening out in the retail market”. Like-for-like sales for the 28 days ended 19 October fell 5.8%, down from a 4.7% fall reported last week.
  • Pacific Brands (PBG) CEO Sue Morphet told shareholders at its AGM that PBG now expects flat earnings for the FY implying a FY09 NPAT of $116.6m. Analysts’ on average expected $120.4m.
  • Uranium stocks doing OK despite industry consultant UXC publishing a report today saying the Uranium spot price has fallen US$2/lb to US$44/lb. Its long term price remains at US$75/lb.
  • Oz Minerals production numbers are out — GSJB Were’s have described them as better-than-expected, with the exception of zinc production at Golden Grove. Announced 3Q copper production at its Sepon operations reached a record 17,546 metric tonnes and that Gold production was 22,190 ounces.
  • Oil Search (OSH) has announced a fall in 3Q revenue due to shipment timing issues lowering oil sales to US$206.9m from $US294.2m.

Broker Stuff today…

  • Macquarie Group (MQG) receiving some attention today after announcing yesterday it was selling its Italian mortgage book and that it will take a $70m hit on the sale of it. JP Morgan cut its target price to 7477c from 7719c and maintains their Overweight recommendation saying, “We believe MQG offers compelling relative value.” ABN AMRO also cut their target price to 6350c from 6400c and maintains their BUY recommendation, they cut their FY09 profit forecasts by 7.5% to $1.44bn and FY09 EPS estimates also by 7.5% to 508c. The stock is down 60.2% in the past 12 months.
  • UBS Warburg maintain their BUY recommendation on (WTF) and 400c target price after it provided an update for 1Q09 trading yesterday. Total room night-hire grew 34% from last year. They expect continual share price outperformance. The data can only be good news for the likes of Webjet (WEB) another online travel and accommodation site.
  • GSJB Were expects ANZ Bank (ANZ) to announce cash earnings of $3.128bn when it announces its result on Thursday. They maintain their HOLD recommendation and 2045c target price.

The Dow Futures suggest a 17 point fall on Wall Street tonight. 

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

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