The market is doing OK — up 76 — but we were expecting better things after the SFE Futures suggested a 134 point rise this morning ahead of US Election result. We were up 103 at best. Resources outperforming after a strong session on the London Metals Exchange. Westpac Bank goes 72c ex dividend today, ANZ tomorrow 74c.

The Dow Jones closed up 305. Up all session — 332 at best. Strong rally in the last hour. The appetite for risk has increased as the US Presidential Election draws to a close along with the uncertainty that causes volatility in the marketplace. Investors ignored the poor economic data with factory orders being down more-than-expected. The US dollar was down as the ‘flight to safety’ was reversed and commodities and oil rose. US treasuries up. All sectors up.

Macquarie Group expects big falls in contract iron ore prices in 2009 going by what speakers had to say at the Macquarie China conference. Despite the bleak research, iron ore stocks are outperforming – BHP up 4.5%, RIO up 4% and FMG up 5.1%.

In the news today…

  • Allco Finance Group (AFG) has called in the receivers. Commonwealth Bank seems to be the most exposed among the major banks.
  • The Australian and the AFR both suggest ABC Learning (ABS) is thinking about calling in the receivers having failed to re-negotiate loans with banks. The CBA is the main lender according to the AFR with $500m thought to be outstanding.
  • West Australian Newspapers Holdings (WAN) said 1Q net profit was up 43.8% to $29.7m from $20.7m a year ago. The overall result was down on the pcp and below some of the broker’s forecasts on the EBITDA, revenue, and NPAT lines.
  • CSR Ltd (CSR) 1H net profit to September excluding items was $32.9m down from $67.5m last year — down 51% and well below broker forecasts.
  • Queensland Gas (QGC) — A large parcel of shares (206.4m) was traded at 575c.
  • AMP Ltd (AMP) and Mirvac Group (MGR) in a trading halt — they will raise a total of $700m in equity — Mirvac’s non-renounceable entitlement is set at 90c per stapled security — no price has been disclosed for AMP but a discount to the institutional placement price is expected.
  • Babcock & Brown Infrastructure Group (BBI) announced it will suspend payment of distributions and defer dividends until further notice.
  • Bendigo and Adelaide Bank (BEN) has withdrawn its $75m convertible preference share offer due to deteriorating market conditions.
  • ASX Ltd (ASX) said trade volumes were strong during October despite the temporary ban on short selling. Total cash market trades for October were up 40%, average daily trades were also up 40% on the year at 429,527.
  • Brockman Resources (BRM) has provided a development update of their Marillana project.

Broker Stuff today … not a lot today considering the Melbourne Cup was on yesterday.

  • Citi maintain their HOLD recommendation on Telstra (TLS) and 465c target price saying they don’t expect any earnings upgrade at the TLS Investor Briefing tomorrow. GSJB Were maintain their BUY recommendation and 545c target price say highlights at tomorrow’s Investor Day are likely to be: “(1) review and discussion of company strategy; (2) update on business transformation program; (3) imminent network/product launches and (4) September Q trading update”.

Other news…

  • The Australian government has released its economic forecasts for 2008-09. Various economists are already labeling it far too optimistic. It expects 2008-09 GDP growth of 2%, above expectations of 1.8%; predicts unemployment of 5% by mid-2009 compared to 4.3% at the moment; inflation to be at 3.5% by mid-2009 and the 2008-09 budget surplus forecasts has been trimmed back to $5.4bn. NAB economists have labeled the outlook as “too optimistic by a long way”.
  • GSJB Were is expecting the Reserve Bank of New Zealand to cut interest rates by a full 1% on December 4.
  • Australia’s Trade Surplus figures were substantially stronger than expected and the biggest since June 1997. Surplus is at $1.46bn, up from $1.24bn in August — markets were expecting $500m.
  • September building approvals down 7.2% — much worse than the expected 1% fall.
  • The Dow futures suggest a 19 point fall on Wall Street tonight.
  • The world is waiting on who will be the next President of the US — Barack Obama remains the favourite.  

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