The market is up 71 following a solid session on Wall Street. Energy sector doing well today — up 5.2% on the higher oil price. Resources up 4.6%. BHP opened up 9% but has drifted back — up 5.9%. RIO up 1.6%. More talk about RIO having to cut capital and operational expenditure and as well as aluminium production going forward due to its hefty debt position. Financials underperforming relatively — up 1.5% with CBA up 1.8%. WBC up 1.4%. QBE Insurance down 4.8% after their oversubscribed $2bn institutional placement last night – 97.6m shares at $20.50 each.

Dow Jones up 247 last night — up 1174 points in 4 days or 15.5% — not a bad rally. The ASX 200 by comparison is up 187 points or just 5.5%. Main points: Negative consumer confidence, new home sales, business investment, personal spending and durable goods orders data brushed aside. Bargain hunting in the tech sector after recent heavy falls — up four days in a row. Some confidence in the auto sector around General Motors getting a bailed-out next week — automakers up 31%. Energy sector up 5.6% – Chevron up 4.4%. Tech sector up 4.2% — Cisco Systems up 6.3%. Defensive consumer staples up 1.4%. Utilities up 0.5%. Healthcare up 1.2%. Metals mostly up. Oil price up $4.18 to $54.20. Gold down $10 to $808.50. Bonds up. A$ up 0.55% against the US dollar. China cut its benchmark rate by 1.08% to 5.58% to stimulate their economy.

BHP Billiton held its AGM today — mostly upbeat, says it is extremely well positioned with good cash flow and higher margins than peers. Expects long term metals demand to remain in tact and reiterated the reason for pulling out of RIO is due to their high levels of debt.

Other news today…

  • Timbercorp (TIM) posted FY results with net profit at $44.6m down 32.1% on last year and EPS at 13.1c down 42.5% on-year.
  • Transfield Services (TSE) has won $300m in two new contracts and two contract extensions.
  • Leighton Holdings (LEI) doing well after its Persian Gulf JV won a $3.75bn contract to build a mixed-use development in Dubai.
  • Arrow Energy (AOE) has signed an agreement with PT Petrosea to establish a coal bed methane drilling capability in Indonesia.
  • AGL Energy (AGK) has appointed a chief economist and a head of corporate affairs.
  • Australian Worldwide Exploration (AWE) announced it will pay a special dividend to shareholders and has enough cash to make acquisitions.
  • Babcock & Brown Communities Group (BBC) says it hasn’t receive a superior bid to Lend Lease’s.
  • Babcock & Brown Wind Partners (BBW) has appointed an independent chairman.
  • Centennial Coal (CEY) says it continues to experience strong coal demand despite the current situation.
  • Hastie Group (HST) won a $29m North West Shelf platform contract.
  • Tower Australia (TAL) posts FY results — underlying profit up 14% to $67.9m with final dividend of 4.5c. Said balance sheet remains strong and is looking for market opportunities.
  • Pacific Brands (PBG) chairman Pat Handley announces his retirement.

Broker Stuff today…

  • ABN AMRO has cut its target price on BHP Billiton to 3670c from 3966c after cutting its earnings expectations by 17.6% in 2009, 35.9% in 2010, 25.2% for 2011 and 8.2% for 2012. Despite cutting their target price, they maintain their BUY recommendation.
  • Lots of broker commentary on David Jones (DJS) this morning after its 1Q sales update yesterday. No recommendation changes but Merrill Lynch and Credit Suisse both cut their target price to 280c and 245c respectively. Target prices range from 366c at the top end down to 240c. All expect tough retail conditions ahead.
  • Macquarie Equities says although Telstra (TLS) did submit a non-compliant proposal to build FTTN, there is the risk that the government could build it themselves. They maintain their Outperform recommendation on the stock and 418c target price.
  • ABN AMRO hosted its fifth regional banks conference. They say the regional banks “appear well placed within this cyclical downturn, given their conservative portfolio mix as well as a supportive set of government initiatives”. Their preferred regional continues to be Bank of Queensland (BOQ) based on valuation grounds (9.7x FY09F PER), and says Bendigo Bank (BEN) is trading on a PER of 11.8x.

Other Stuff today…

  • China has cut rates by 108bp to 5.58%. It is their biggest rate cut so far and suggests they will do what they need to do to defend 8% GDP growth.
  • Wayne Swan has admitted that 2008-2009 GDP growth will probably be below the 2% government forecast.
  • Wall St is shut tonight for the Thanksgiving Holiday and has a half day on Friday. Friday is called “Black Friday”. It is the biggest shopping day of the year and seen as a barometer of consumer sentiment. We will hear about it on Monday.

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

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