Good start to the week — we are up 98 — almost double the 50 point gain the SFE Futures suggested this morning. All sectors up and doing well. Construction sector outperforming with Leighton’s up 10.7%, WorleyParsons up 10.4% and Macmahon Holdings up 11.6%. Only a couple more sleeps ahead of the US election. Senator Obama is still the clear favourite to be the next US President. We can expect an RBA decision on interest rates tomorrow 2:30pm — most of us will hear about it at the races.

A few October statistics — VIX index closed at record highs all month getting up to 80.06 — up 750% from the 9.39 low set in 2006. Dow Jones fell under 9000 for the first time in five years after experiencing its biggest 5 day fall. The Dow also had its two biggest point rises ever in October and the S&P 500 rose 19.5% in 1.5 trading days from an intra-day low to the next day’s close.

Dow up 144. Up 274 at best. Down 61 at worst. Dow up — bit of profit taking towards the close. The end of the Presidential Election marathon may bring a touch more certainty to the market although political events rarely have much impact on the market in the short term and an Obama win is pretty much discounted already (he is paying just $1.09 form a win). 3Q inflation and September’s personal spending data came in as expected. Jobs numbers to come on Friday. Oil up. Metals all down moderately bar nickel. US dollar up against the basket of currencies. A$ down against the US dollar — 66.91c. Treasuries down on rotation out of ‘safety’ and into equities.

  • Both BHP and RIO up in ADR form on Friday, 1.6% and 1.15% respectively.
  • Metals mostly down — Copper down 2.2%, Zinc down 3.1% and Aluminium down 0.9%. Nickel up 1.72%.
  • Oil price up $2.28 to $68.10 — it closed the week higher and experienced its biggest monthly fall since the futures trading began 25 years ago.
  • Gold down $20.30 to $718.20
  • Bonds up with the 10 year yield down to 3.96%.

Independence Group boss and Irish billionaire Anthony O’Reilly has put his $480m stake in APN News & Media on the market as he looks to pay down debt. He has already received a heap of interest for the stake. It wasn’t long ago that Independence Group together with Waterford Wedgewood bid $6.20 for APN News & Media. APN closed on Friday at $2.41. As one fund manager put it, “knocking back $6.20 wasn’t one of our smartest decisions”.

In the news today…

  • BHP Billiton (BHP) said it has no plans to cut iron ore production despite Brazil rival Companhia Vale do Rio Doce announcing cutbacks due to slower demand and higher costs.
  • Caltex Australia (CTX) cut its FY earnings guidance mainly due to the big falls in the value of the $A and crude prices. Now expected to be between $315m and $345m, down from $675m in 2007.
  • Westpac Bank (WBC) is set to appoint John Curtis — current chairman of takeover target St. George — as deputy chairman of the merged group.
  • Allco Finance Group (AFG) has requested a trading halt pending an announcement about a possible resolution with the banks about a debt extension. Expected to begin trading on Wednesday if not earlier.
  • Mount Gibson (MGX) has signed new off-take agreements with two parties after 3 customers defaulted on previous agreements.
  • Gindalbee Metals (GBG) has requested a trading halt.
  • APA Group (APA) announces that Japan’s Osaka has joined a Marubeni led consortium to become an equity partner for APA’s unlisted investment vehicle.
  • Ridley Corp (RIC) said its EBIT from its Australian business in the 1Q were up 10% and in line with expectations. It held its AGM today.
  • Marion Energy (MAE) up 72% to 31c after announcing a significant increase in gas in Place Resource.
  • Minara Resources (MRE) has continued its great form — up 28.3% to 77.5c — since announcing its rights issue. It was up a massive 270% since this time last week.
  • Wattyl (WYL) has responded to a share price query saying the company is not aware of any information.
  • United Minerals (UMC) up 15% after announcing a new discovery and its 100% Pilbara iron ore project.
  • Jabiru Metals (JML) up 25% after announcing a massive sulphide discovery at its Bentley site.

Broker Stuff today…

  • JP Morgan cut their target on Commonwealth Bank (CBA) to 4027c from 4472c but maintain their Neutral due to weaker than expected funds under management for the September Q. USB Warburg also cut their target rice to 4300c from 4600c but maintain their BUY recommendation.
  • GSJB Were expects CSR Ltd (CSR) to announce a 1H net profit of $77.4m (before one-offs) when they announce their result on Wednesday. They maintain their HOLD recommendation and 230c target price.
  • UBS Warburg cut its target price on Wesfarmers (WES) to 2190c from 2264c and maintain their Neutral recommendation after cutting their EPS forecasts by 19% in FY10 and 20% in FY11.

Other Stuff…

  • Reserve Bank of Australia expected to cut rates by 50bps tomorrow to a two and half year low with concerns that demand in iron ore and other exports will slow further after the slump in the US and Europe has deepened and Chinese manufacturing output contracted last month.
  • The Dow Futures are suggesting a 4 point rise on Wall Street tonight.
  • Melbourne Cup tomorrow — the market is open but it’s a non-settlement day. There will not be a Marcus Today Newsletter, we will be back on Wednesday — hopefully a lot richer.

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