The market has been an up and down day – currently down 53 – up 11 at best, down 60 at worst. Better than the 98 point fall the SFE Futures predicted after further heavy falls on Wall Street. Financials outperforming relatively for most of the morning on the back of Macquarie Group’s 1H result and 2H outlook. Property Trusts continue to struggle – down 2.8% – resources mixed despite metal price falling over in London overnight.
The Dow closed down 223. Up 74 at best. Down 251 at worst. Citigroup announced it would cut 53,000 jobs, Japan joined Europe and went into a technical recession and October’s Industrial production was up more than expected due to recovery after hurricane season. All 10 sectors down – trading volatile, swinging between gains and losses 18 times – below average volumes. The NASDAQ fell 2.2% and the S&P 500 dropped 2.5%. Gold down, Oil down.
Macquarie Group (MQG) doing well today – it announced its 1H profit result. 1H net profit down 43% to $604m from $1.06bn last year – in line with expectations. (ABN AMRO expected a 41% fall to $620m – GSJB Were $570m) Declared an interim dividend of 145c – GSJB Were expected 138c. 2H outlook has impressed. Management say it will be in line with 1H, some brokers expected much worse. MQG share price down 73% this year compared to the overall market fall of 42.5%.
In the news today…
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- WA decision to allow uranium mining– the ban on uranium mining has been lifted in WA. Speculation of 8 mines in 8 years (bit ambitious says Patersons). Paladin the most leveraged stock with low cost projects they can ramp up.
- Lion Nathan (LNN) – A day after launching a takeover bid for Coca-Cola Amatil (CCL), LNN has announced a FY08 net profit of $272.7m, slightly below analysts’ expectations. Analysts were expecting $275.2m on average.
- Mount Gibson (MGX) expects a 1Q after tax profit of around $60m.
- Seek (SEK) has completed its acquisition of 305 in Brazilian websites.
- CSR Ltd (CSR) is in a trading halt as it completes in institutional placement.
- Harvey Norman (HVN) announced like-for-like sales for the 28 days to November 16 fell 0.8% compared to the same time last years. HVN says it will give another set of 28-day results next week to “give guidance as to what is really happening out in the retail market.”
- Salmat (SLM) has appointed a new CEO.
- St George Bank has ceased to trade. Westpac have taken them over and will be trading with SGB included as of this morning. They will be trading “deferred settlement” until December 2nd. Westpac is set to cut St George board members from combined 23 members to 12.
Broker Stuff today…
- Citi have some research on Australian Banks this morning: They now have a HOLD rating on all 4 major banks with their top pick being ANZ Bank despite cutting their target price to 1425c from 1800c. Their second pick is the National Australia Bank (cut target price to 2000c from 2500c) followed by Westpac Bank (cut target price to 1700c from 2300c) due to “good credit quality performance”. Commonwealth Bank is their least preferred stock among the four. They cut their target price on CBA to 3400c from 3500c despite lifting their recommendation to Hold from Sell.
- A few broker downgrades this morning for CSR Ltd (CSR) after announcing a $482m equity raising. Merrill Lynch maintain their Underperform recommendation and cut their target price to 200c from 250c, J.P. Morgan also cut their target price to 185c from 233c and maintain their Neutral recommendation.
- Citi cut their target price on Babcock & Brown (BNB) to 32c from 1112c after reducing their EPS estimates. They expect further write downs.
- J.P. Morgan has downgraded the Australian Media sector to Underweight and says the sector is facing a “perfect storm” and is currently subject to 5 key forces: (1) Cyclical downturn, (2) Structural shift, (3) Financial leverage (4) Industry consolidation and (5) valuation de-rating.
- The RBA released minutes from its previous board meeting when it cut interest rates by 75bps.
- Fitch Ratings Group says Australian corporate credit metrics are indicating a huge deterioration in 2007-08 and are heading to levels not seen since the early 1990’s.
- The Dow Futures suggest a 9 point fall Wall Street tonight at 12 pm.
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