Poor finish to the week — down 52 — despite a positive night on Wall Street. Metals in London have done most of the damage today causing resources to underperform. Financials are also struggling. All major banks were doing OK earlier this morning but are now all in the red.

Dow up 189 — up 276 at best. Down 14 at worst. Spiked 200 points in last 15 minutes. Stocks up despite the forward GDP number showing the economy contracted in the 3Q at an annualised rate of 0.3%, a bit better than expected — economists had expected -0.5%. The number is subject to revision a number of times. First contraction in 7 years. In a way, a bigger fall might have been better, no one wants to string the recession out any longer than necessary. Other global central banks are coordinating interest rate cuts in the hope to stem a further economic slump and improve liquidity. The Fed started buying commercial paper to get lending flowing to businesses. Continued rotation into equities. Metals fell — Nickel down a big 12% and Zinc down 8% reversing the sharp gains yesterday. Bonds down. Gold down $15. Oil down $1.66 to $65.82 pr barrel.

In the news today … relatively quiet day.

  • BHP Billiton told analysts’ at a site visit that its aluminium business is well placed to ride out the high costs hurting the industry and its strategy is to develop high quality bauxite resources and to be moderately long alumina.
  • ConnectEast Group (CEU) said traffic on its EastLink tollway is growing but still below forecasts.
  • Kingsgate Consolidated (KCN) said it was reviewing its Chatree North expansion project to cut down on costs and that it will not be in a financial position to expand until the 1H of fiscal 2009.
  • Panoramic Resources (PAN) has released its production report — it produced a record 4,182 metric tons of nickel and expects its production for the year to be in the range of 20,500-21,500 tons of nickel.
  • Admiral Resources (ADY) has come out of a trading halt — they will sell Rincon Lithium to pay off debt.
  • Australian World Exploration (AWE) has released its production report — 1Q output has come in at 2.52mboe and revenue at $252m. Expecting FY revenue of $730m.
  • Seven Network (SEV) says it has no reason why the share price is behaving the way it has.
  • Macquarie Communications (MCG) has lowered it distribution guidance to 10c.
  • Jabiru Metals (JML) is in a trading halt.

Broker Stuff today…

  • There is a heap of broker commentary on Westpac Bank (WBC) after its FY result — Macquarie Equities described it as “solid” and expects WBC to Outperform and with 2350c target price. UBS Warburg says BUY but cut its target price to 2400c from 2500c and that is was a, “good, predictable result” despite the weakening environment. GSJB Were says HOLD with a 2568c target price.
  • GSJB Were maintain their BUY recommendation on Wesfarmers (WES) and 3317c target price — 40% above the current share price — saying in the short term the market is likely to focus on two key areas: (a) Gearing and Debt Refinancing; and (b) Coal Price Outlook.
  • AGL Energy (AGK) has been upgraded by Credit Suisse to Outperform from Neutral after describing the PNG LNG stake sale as an “excellent outcome” — $150m above their expectations. They followed other brokers and upped their target price to 1680c from 1652c. Citi also upped their target price to 1540c from 1510c, JP Morgan to 1600c from 1525c and Merrill Lynch to 1620c from 1570c.

The Dow Futures suggest a 77 point fall on Wall Street tonight.

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

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