The market is up 106 outperforming the 58 point rise predicted by the SFE Futures this morning. All sectors enjoying the bounce, particularly property (still recovering) and energy after the 10% bounce in the oil price overnight.
The Dow was up 239. Up 254 at best. Down 58 at worst. Biggest 3-day rally since November — up nearly 11% week-to-date. US Financials up 10% – the FASB told Congress they would have new guidelines recommending a suspension to the accounting mark-to-market rules ready within 3 weeks. Bank of America said they were profitable in the first 2 months of the year. Retail numbers better-than-expected. Initial jobless claims worse-than-expected. Business inventories down 1.1% in-line with expectations. General Electric’s credit rating cut less-than-expected — only to AA. General Motors said it wouldn’t need the previously requested $2bn from the government. BHP and RIO both up in ADR form overnight — 0.22% and 3.48% respectively. Metals mostly down. Oil up 10% ahead of OPEC’s meeting this weekend. Gold up. Bonds up. A$ up.
The NAB are up another 5% today after their Strategy Update yesterday … by all accounts the initial “Its OK” commentary on the announcement was not the impression brokers came away with after the company presentation which was less than enthusiastic. Despite that the NAB is up 7.6% since yesterday morning … but note the banks are one of the most shorted sectors in the market and we are having a bit of a short covering rally. Broker’s comments on the NAB this morning:
- UBS Warburg — Neutral — 1800c target price — remain very concerned with the outlook for its UK operations.
- Merrill Lynch — Underperform — cut target price to 1900c from 1990c — “Major risks remain the spike in bad debts and problem loans, particularly in the UK and NZ, and UK margin squeeze. As these issues offset domestic revenue strength and ANZ is similarly cheap, NAB is rated Underperform and our #4 pick”.
- Macquarie Equities — Outperform — 2400c target price — “It’s easy to punch holes in the NAB ‘buy’ story.” Believe there is no imminent need to external capital, and no material acquisition risk.
- ABN AMRO — Sell — 1497c target price.
- GSJB Were — Hold — cut target price to 2070c from 2286c.
Other announcements this morning…
- Babcock & Brown (BNB) has been placed into Voluntary Administration — its satellites say there won’t be any immediate impact.
- Telstra’s (TLS) group MD of strategic marketing, Bill Stewart, resigns and is replaced by Kate McKenzie.
- News Corporation (NWS) announce a restructuring of its television and film operations and COO, Peter Chernin, prepares to depart.
- In response to a price query, Virgin Blue (VBA) said they don’t expect profit to vary by more than 15% verses guidance. VBA’s share price has fallen nearly 50% year-to-date.
- James Hardie (JHX) makes some board changes.
- Crown Casino (CWN) said it will rewrite its agreement to buy US casinos group Cannery after failing to meet its original timetable to satisfy the conditions of the deal.
- Fairfax Media (FXJ) announces resignation of New Zealand CEO, Joan Withers.
- Mirabella Nickel (MBN) in a trading halt relating to an equity raising.
- Linc Energy (LNC) posted a 1H09 NPAT loss of $7.8m. 1H revenue at $1.1m.
- Dow Jones up 701 points or 10.8% from its 12 year low of 6469 last Friday. Now 7170.
- S&P 500 up 84 points or 12.6% from its 12 year low of 666 last Friday. Now 750.
- NASDAQ up 158 points or 12.4% from its 5 year low of 1268 last Friday. Now 1426.
- FTSE up 220 points or 12.4% from its 5 year low of 3492 last Friday. Now 3712.
- Japan’s Nikkei index up 17 points or 2.5% from its 25 year low of 7021 on Tuesday. Now 7198.
- ASX 200 up 115 points or 3.6% from its 5 year low of 3120 on Tuesday. 3235 last night.
Off course the Dow Jones fell 22% in 22 days before this rally. The ASX 200 only fell 12.3% in the same period. So the Dow is due a more radical bounce.
The Dow Jones futures suggest a 21 point fall on Wall Street tonight.
MARCUS PADLEY is the Author of the MARCUS TODAY Daily Stockmarket Newsletter.
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