The market is having a good day — up 88 — up 100 at best. A lot better than the 33 point rise the SFE futures predicted this morning. Resources outperforming led by BHP and RIO — metals had a great session overnight in London. Financials doing OK. Despite the market doing well – 37 stocks still managed to hit a fresh yearly low.

Dow was down 74. Up 297 at best and down 175 at worst. The market was up 3.3% on the Fed’s 50bp rate cut but plummeted in the last 10 minutes on poor revenue data from General Electric (GE). Commodities were all up significantly assisted by the drop in the US dollar. Bonds were down with rotation into commodities. A$ up 3.93% against the US dollar and up 3.55% against the Yen. Gold up. Oil up.

  • Both BHP and RIO up in ADR form overnight, 7.5% and 11.47% respectively. Both up 13.9% and 18.5%.
  • Metals all up – Nickel up 14.2%, Copper up 12.4% and Zinc 10%. Aluminium up 2.09%.
  • Oil price up $4.65 or 7.4% to $67.48 on the back of the US$ experiencing its biggest one-day fall in 13 years after the Federal Reserve cut interests rates 50bps.
  • Gold up $13.50 to $754.00. Newcrest Mining (NCM) says the outlook for the Aussie dollar gold price is positive due to financial economic uncertainty, they say, “The demand-supply equation for gold remains strong.”
  • Bonds down with the 10 year yield up to 3.84%.

Westpac results — In line with expectations (some relief therefore). Dividend of 72c…some brokers expected 69c versus 68c last time — that’s good. Bad debt charge in line with expectations. No real guidance. Well positioned for the challenging year ahead. St George integration planning on track. Loan growth to slow going forward. Impairment charges to rise. Gloomy economic outlook but should avoid recession.

In the news:

  • AGL Energy (AGK) says it will sell all of its oil and gas assets in Papua New Guinea for around $1.1bn after closing out all its hedges.
  • Gunns (GNS) has provided an update on its Bell Bay Pulp Mill at its AGM.
  • Beach Petroleum (BPT) has experienced record revenue for 1Q – up 53% to $182.8m.
  • Toll Holdings (TOL) says trading conditions since June this year have been in line-with-expectations and remains confident of a strong result.
  • Australian Pharmaceuticals (APA) has announced a FY net profit of $15.2m – EBIT of $49.7m in-line with guidance.
  • BlueScope Steel (BSL) has provided a market update — says underlying net profit for the 1Q is around $430m but warned that it expects a tough time in the 2H due to challenging economic conditions.
  • GWA International (GWT) MD Peter Crowley says the company is performing pretty much in-line with that of last year.
  • Downer EDI (DOW) reiterates its 2009 earnings guidance for a double-digit increase in net profit.
  • OneSteel (OST) says good progress has been made on the Smorgon acquisition and that it expects steel prices to remain volatile.
  • Rio Tinto (RIO) Chairman Paul Skinner will step down in December 2009.
  • Origin Energy (ORG) and ConocoPhillips have formed Australia Pacific LNG. ORG say the transaction strengthens their financial position and will pay an additional dividend of 25c.
  • Gunns (GNS) has provided an update on its Bell Bay Pulp Mill at its AGM.
  • Boart Longyear (BLY) has provided a market update – they cut their revenue growth by 3% to 22% and also plans to cut capital spending in 2009 to around half of 2008 levels.

Broker Stuff today:

  • ABN AMRO maintain their BUY recommendation on BHP Billiton (BHP) and 3966c target price saying its “nickel sulphide business is probably no worse off than many of its competitors” and that it will have to concentrate on improving efficiency since production is capped by the 100-110ktpa capacity of the smelter.
  • Leighton Holdings (LEI) has been cut to Neutral from Outperform by Macquarie Equities on forecasts of slower GDP growth.
  • Deutsche Bank has cut its target price on Telstra (TLS) to 530c from 540c and maintain their BUY recommendation saying, “We now expect that Yellow Pages and White Pages will report slower growth in FY09 and negative growth in FY10”.

Other stuff:

  • Federal fund futures are now pricing in 100% odds of at least another 25 basis point rate cut in the US before year-end.
  • The Dow Futures are suggesting a 68 point rise on Wall Street tonight.  

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

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