Our market is down 50. Not a great performance considering the small rise on Wall St and the Futures suggesting a 7 point fall this morning.

But you have to put it in context. Yesterday our market was up 4 (up 40 at one point) despite a 227 point fall on Wall St. The lack of logic behind that and the lack of a follow through on yesterday’s buying leaves us a bit vulnerable to a setback this morning and a setback we have had.

Financials down 0.8%. Resources down 0.7%. For the first time since 1994 the Financial sector is now smaller than the Resources sector.

Hard to find a feature this morning. Seems we are drifting into what will be a normal weekend for us but a long weekend in the US and UK markets both of which are shut on Monday.

Dow up 24 – up 68 at best, down 10 at worst. US market trading in a narrow range ahead of the long weekend. Financials up 0.9% on UBS raising $15bn in new capital. Lehman Bros down 2.68% after broker downgrades yesterday. Resources up. Metal prices well down. Tech stocks outperformed – Nasdaq up 0.67% ahead of the 0.19% rise on the Dow. Energy sector down 1.1% as crude slid $2 – biggest sector fall on the S&P500 on the day. Oil hit a new intraday record of $135.09 but closed at $130.74. Housebuilders down. Jobless numbers stronger than the expected. House prices fell 3.1% in 1Q – worst quarterly drop on record but better than expected. Gold stocks down – Newmont Mining down 1.23%. Barrick Gold down 0.3%.

  • Both BHP and RIO up in ADR form overnight, 3.85% and 3.18% respectively. BHP down 37c to 4733c. RIO down 48 to 15053c.
  • Metals all down – Nickel down a big 7.2%, Zinc down 4.5% and Copper 1.4%. Aluminium down 0.8%. Zinifex down 7c to 1035c.
  • Oil price down $2.95 to $130.04 after hitting a new intra day high of $135.09 – some analysts’ say that oil prices have risen on the back strong demand for diesel in China, where power plants in some areas are running desperately low on coal. Woodside down 139c to 6862c.
  • Gold down $10.30 to $918.30. Newcrest down 132c to 3383c.
  • US Bonds down with the 10 year yield up to 3.91%.

Dow Futures currently up 2.

Coal stocks well up with heightened speculation that internationals will continue to target the sector after ArcelorMittal took a 14.9% stake in Macarthur Coal (MCC) and is now looking at full scale takeover. MCC up 2.2%. Felix Resources (FLX) up 5.8%, Gloucester Coal (GCL) up 4.8% after adding 10% yesterday – both companies potential takeover targets. Centennial Coal (CEY) also up 3%.

Other news…

  • Wesfarmers in a trading halt as they put away their Retail Entitlement bookbuild.
  • Looks like the ANZ has missed out on buying the 53% stake in the Wing Lung Bank with the Chinese press saying the China Merchants Bank has got it.
  • Westfield Group’s (WDC) AGM saw their 1 06.5c distribution confirmed and CEO says WDC positioned well for future – WDC up 6c to 1731c.
  • Aquila (AQA) up 4.9% as they announce the demerger of their exploration assets into a new vehicle called Aquila Exploration. AQA up 72c to 1520c.
  • Fortescue Metals unchanged today after a 5% rise yesterday on speculation the Chinese were going to buy a stake in the company. The stock touched a high of 998c this morning. Hasn’t quite cracked $10. Give it time.
  • Brokers downgrading their recommendations on Qantas in light of the oil price. Some of the US airline stocks have been smashed this week with fears of Chapter 11. QAN and VirginBlue both hitting year lows. QAN down 4c to 332c.
  • Downgrades to earnings and recommendations on James Hardie in the post results research today. JHX down 14c to 544c.
  • Pan Australia (PNA) has its first Phu Kham concentrate arrives at port. PNA down 3c to 117c.

Some news on the broker front –Challenger Infrastructure (CIF) cut to SELL by Merrill’s, James Hardie (JHX) recommendation cut by Citigroup while Merrill’s downgrades JHX’s profit estimates. Babcock & Brown cut to NEUTRAL by Merrill’s, and Consolidated Media (CMJ) cut to SELL from Buy by Merrill’s. Babcock and Brown Power (BBP) slashed by Macquarie, GSJBWere cut profit forecast on Sigma Pharmaceuticals and Qantas target price downgraded by ABN AMRO and Credit Suisse.

In the MARCUS TODAY newsletter today we have an article about why you should buy the Australian Equity market. We also have lists of the highest yielding and cheapest stocks in the ASX 200 along with an article on what to expect in the week ahead. And loads of other stuff.

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