The market is up 243 having been up 353 on the open. 100 points off the top. The Futures this morning suggested a 158 point fall on the back of a 128 point fall on Wall St which was a big improvement on the 464 point fall it had on the open.

A client explained a new investment criteria to me this morning – “When I buy something I assume that I am going to have to explain to the wife why I bought it and why I lost money. If it sounds really stupid, I don’t buy it, because she feeds off my stupidity and this week she tells me, she has had a gut full”.

The Dow Jones closed 128 point lower after the Federal Reserve lowered interest rates by 75bps to 3.5. It was the largest interest rate cut since 1990. The market is still factoring in another cut of 50bp at the FOMC Meeting next week.

Resources are making some impressive gains – up 8.1% overall with BHP up 285c or 9.2% to 3385c and responsible for 47 points or 17% of the index gain today. BHP has announced record 2Q production number this morning – they are generally good. RIO is up 670c or 6.6% to 10765c.

Metals mostly up overnight, Zinc up 3.5%, Copper up 2.1% and Aluminium 0.9%. Nickel down 0.7%. Zinifex up 67c to 908c. Oil price up $1.02 to $89.64 on expectations that a slow down in the global economy won’t result in slowing demand. Woodside up 257c or 604% to 4351c. Gold up $8.60. Newcrest up 248c to 3425c.

The headlines in every State talk about Black Tuesday except the Northern Territory which leads with “Croc Attack” (some bloke shot his mate in the arm trying to rescue him from a Croc whilst they were, of all intelligent things, collecting Croc eggs).

  • Oxiana’s 4Q production report is in line with to a bit below expectations with costs a bit higher than expected. Production forecast for 2008 in line with expectations. OXR up 37c to 295c.
  • Things are going from bad to worse for MFS shareholders. According to the AFR, US hedge fund Fortress Investment is demanding a $150m loan repayment from that was supposed to be due at the end of February but only if MFS’s market value doesn’t fall below a certain amount, which it has. MFS is now looking to sell its ownership in MFS Diversification and its travel business said to be worth around $2.6bn. MFS unchanged today at 99c.
  • QBE Insurance (QBE) announced that its $23bn fixed interest and cash investment portfolio has no direct exposure to U.S. subprime mortgage products, collateralized debt obligations or collateralized loan obligations. QBE also mentioned that its $1.7bn equities portfolio is protected through derivative hedges and that it actively manages its portfolio in accordance with its absolute return low-risk investment strategy. QBE up 9.2% today to 3408c. Goldman Sachs JB Were have reiterated their BUY recommendation today saying “QBE is an attractive Buy into current weakness”. QBE up 8.3% to 2817c.
  • In case you were worried about the Australian economy – Harvey Norman put out 2Q sales numbers yesterday and Gerry Harvey said consumer spending remains “very strong…. if you’re like an awful lot of Australians….they take no notice of what’s happening to the stockmarket….The positives are too strong, employment numbers have never been higher, people’s income levels have never been higher, tax cuts are coming in. It’s very difficult to get staff to work for you in an awful lot of areas. When people have got that much money and full employment, it has to change quite dramatically for things to be affected”. Deutsche Bank maintain their HOLD recommendation on HVN and 630c target price saying “Whilst we expect demand for consumer electronics to be one of the more robust discretionary categories, we note HVN is now cycling more difficult sales comps”. HVN up 30c to 566c.
  • Macquarie Group (MQG) announced it has temporarily suspended its market-making in warrants. Issues have arisen with its internal technology that has interrupted its normal operations. MQG up 5.4% to 6130c.
  • Anzon Australia (AZA) announced it has accepted Nexus Energy’s (NXS) revised takeover offer of 175c a share comprising of 71c in cash and 104c in shares for each Anzon share. AZA up 18% to 161c and NXS up 9% to 145c.
  • CPI numbers out today – expected +1.0% – Q4 CPI up 0.9% (core up 1.1%) on the Q and 3.0% YonY – top of the RBA’s band. Not comfortable but not enough to demand a rate rise at the next RBA Meeting on Feb 5th although the A$ is up on the number suggesting the CPI number has added to the chances.
  • Goldman Sachs JB Were upped their recommendation on Telstra (TLS) to BUY from HOLD saying the three main drivers for their recommendation are “reasonable valuation (FY08E PER 14x, FY09E PER 12.6x, FY08 dividend yield 6.9% fully franked), “strong operational momentum” and “Solid, defensive earnings outlook with minimal downside earnings risk.” They have a 485c target price implying a 27% total return from the current levels. TLS up 17c to 421c.
  • Credit Suisse upped their recommendation on Wesfarmers (WES) to NEUTRAL from UNDERPERFORM saying “After the significant repricing of the equity market in the past few days, we have reconsidered the relative value of WES, particularly in comparison to its main comparative, Woolworths (WOW),” They have a 4200c target price. WES up 250c to 3500c.

I have listed all the ASX 200 PEs and Yields in the Marcus Today newsletter today and there are plenty of stocks to buy for the value they now offer and you never know, you could make short term money out of a long term decision.

THE MORNING MARKET REPORT is provided by the MARCUS TODAY daily stockmarket newsletter. You can subscribe for a free five day trial here.