Morning Market Report, Dec 04, 2007

The market is down 25 at midday – the SFE Futures suggested a 20 point fall in the market this morning.

The Dow Jones closed down 57 overnight – It moved in a 113 point range and finished the session lower for the first time in five days on concerns economic growth will slow and earnings will continue to suffer because of the credit crises. Financials closed down after Deutsche bank announced falling fixed income markets will hurt 4Q earnings. The sector wasn’t helped by comments made by both Fed Bank of Boston President Eric Rosengren and San Francisco President Janet Yellen, Rosengren said in a speech that home foreclosures might worsen if the economy continues to slow and Yellen warned that housing problems could “spill over” into consumer spending. The NASDAQ down 0.9%.

Resources underperforming today – down 1% against industrials unchanged on the day. BHP down 37c to 4283c and RIO down 394c to 14296c. Austock upped their target price on Rio Tinto (RIO) to $188 from $180 after revaluing their assets and commodity price forecasts following the takeover proposal from BHP. They say they wouldn’t be surprised if BHP up their offer to 3.9 BHP shares per RIO share and throw in $20 a share cash. BHP tell us they are in dispute with the tax office over $384m worth of tax and $350m worth of penalties. They say they are confident of their position but the outcome is unlikely to be known for some time. Metals all down overnight, Zinc down 4.2%, Copper down 2.9% and Aluminium 1.7%. Nickel down 1.1%. Zinifex up 2c to 1453c. Oil price up 69c to $89.29 on talk OPEC will lift output at its meeting this week despite the recent fall in prices last week. Woodside down 89c to 4713c. Gold up $6.10. Newcrest down 34c to 3282c.

Fortescue Metals Group (FMG) has released a special purpose finance report this morning – project remains on track, construction continues to advance well across the mine, port and rail operations and drilling results have been encouraging at its Solomon tenements. It also announced a net profit for the 3 months to Sept. of $31.7m, compared to a $222m loss last year. Development expenditure was $791m. FMG down 60c to 5590c.
Metcash Interims – MTS have announced a 1H net profit of $86.2m, up from $66.1m or 30% higher from last year but slightly below the $90m analysts had expected – Were’s expected $90.6m. MTS up 15c to 450c on the back of the result, it has lost 6.7% of its market cap in the past 3 months.
Heaps of research on newly listed Crown (CWN) and Consolidated Media Holdings (CMJ) or PBLDA for now. A lot of HOLD/NEUTRAL recommendations. CWN down 42c to 1385c and PBLDA up 10c to 412c.
Coca-Cola (CCL) had a good session yesterday, up 2% but down 17c today to 1005c – the weekend press talked about the company upgrading or reiterating full year earnings guidance at its trading update tomorrow.
Murchison Metals (MMX) have extended their offer for Midwest (MIS) to December 20 ^th. MMX down 4c to 377c and MIS down 3c to 405c.
Noble Energy has upped its stake in Gloucester Coal to 19.7% and says “In an environment of industry consolidation it is important to Noble to support this vibrant market segment and companies like Gloucester”. Noble have not ruled out making a bid for GCL. GCL up 6c to 602c.
Timbercorp (TIM) is in a trading halt pending an announcement. They did announce a little while ago that they had been approached by a potential buyer. TIM last traded at 179.5c.
Citigroup has a BUY recommendation on Allco Finance Group and a 1269c target price. Now 668c, down from a high of 1324c this year.
Kingsgate Consolidated (KCN) still in a trading halt pending clarification of the Bangkok Post article yesterday saying the Indonesian government could suspend 60 exploration and production licences, 53 of which would relate to their Chatree project. They were hoping to get these approved by Christmas… instead it looks like they could have to put the whole operation on care and maintenance.
Companies going ex dividend today include GTP and PNN.