The market is up 159 ahead of the futures which predicted a 132 point rise in the market this morning thanks to a solid night on Wall Street. Resources leading the way — up 9.0% with BHP up 11.4% and RIO up 7.5%. Energy stocks soaring on the 9% higher oil price — Woodside up 13%. Financials up 4.6%.

The Dow was up 396. Up 552 at best. Up all session. Dow Jones up 4.93%. S&P500 up 6.74%. Nasdaq up 6.33%. All sectors up. The S&P 500 up 14.9% off its Nov 21 10-year low. Down 42% for the year still. Main Points: Government announces a $30bn bailout of Citigroup and a $306bn underwriting. Citigroup up 55% — financials rocket up 18.5%. Short covering and bargain hunting. Biggest 2-day rally since 1987. US dollar down 2.4% and US Bonds down with the 10 year yield up to 3.33% — rotation into equities. A$ up 3.07% against the US dollar. Metals all up on lower US dollar — Copper and Nickel both up 6%, Zinc and Aluminium up 2.8%. Oil price up $4.41 to $53.63 or 9%. Gold up $27.70 (4%) to $819.50.

Two profit downgrades this morning…

  • Qantas revised their FY09 profit guidance to $500m, compared to the $687.9m analysts expected. (GSJB Were expected $739.8m). QAN did say that its new guidance is within consensus range but considering the range is from $374m to $1003m, it’s pretty hard to miss it.
  • Harvey Norman (HVN) held its AGM today – unaudited profit before tax was down 31.5% on year to $71m from $103.6m. Consensus estimates for FY09 NPAT of between $220m-$270m (average $250m), down about 15-20%. Were’s expect FY09 NPAT consensus to drop to between $210m-$220m.

Other news…

  • Brambles (BXB) has held its AGM today — expects operating profit to be in line with last year, despite their US divisions struggling. Revenue is up 4% in the past 4 months.
  • ConnectEast Group (CEU) said it would raise up $450m from existing investors to cut debt and will reduce its next three distribution payments. They will issue a 3-for-8 entitlement offer at 55c.
  • David Jones (DJS) announces the opening of 3 new stores which it says will deliver a 15% increase in EBIT — expects the benefit from FY12.
  • Australian Infrastructure Fund (AIX) has had its $250m credit facility extended.
  • AXA Asia Pacific (AXA) — The Federal Court has approved the sale of AXA’s annuity business to Challenger.
  • Bendigo & Adelaide Bank (BEN) announces share purchase plan to lifts its Tier 1 capital ratio and total capital position.
  • According to the AFR, Rio Tinto (RIO) has delayed expansion of its Camp Lambert iron ore port in WA due to lower demand.
  • Premier Investment (PMV) expects Just Group (JST) to experience a 10% drop in EBITDA this year.
  • United Group (UGL) has secured a transpower construction contract.
  • Bannerman Resources (BMN) up 15% on the back of a company presentation.
  • DUET Group (DUE) announced the stage 5A expansion of the Dampier-to-Bunbury Pipeline in WA has been completed on time and under budget.

Broker Stuff today…

  • J.P. Morgan cut their target price on Leighton Holdings (LEI) to 2330c from 4041c and their recommendation to UNDERWEIGHT from NEUTRAL referring to concerns about its listed investments. They estimate, at today’s prices, LEI will need to book further impairment charges of close to $60m in FY09e, which will include a net loss of around $17.2m on its part sale of its stake in Connect East (CEU).
  • Lots of Broker Stuff on Suncorp-Metway (SUN) this morning after it released a “Banking & Storms Update” yesterday — GSJB Were maintain their HOLD recommendation and 850c target price saying SUN will need to cut its dividend. UBS Warburg cut its target price to 670c from 1000c describing the update as a “masked downgrade” and maintain their NEUTRAL stance, and Macquarie Equities maintain their OUTPERFORM recommendation and 989c target price.
  • GSJB Were has named Sonic Healthcare (SHL) and Healthscope (HSP) as their preferred picks among the healthcare sector saying as a whole, the sector has outperformed S&P/ASX 200 by 40% in the past year.

Other news today…

  • Reminder that US Equity markets will be closed this Thursday for Thanksgiving Day holiday.
  • Owen “Stronger Forever” Hegarty sells 10m shares of Oz Minerals (OZL) on market at 62c because of margin calls.
  • The Dow Futures are suggesting a 11 point rise on Wall Street tonight at 11:30am.

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

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