The market is up a big 105 on the back of Wall Street’s huge gain overnight. The SFE Futures suggested a 128 point rise in the market this morning.
The Dow Jones closed up 331 – it moved in a 367 point range and registered its biggest two-day gain in five years, led by the financial sector after Federal Reserve Vice Chairman Donald Kohn suggested interest rates would be cut at its next meeting. Donald Kohn said “nimble” monetary policy was required because recent financial turbulence had undone some of the improvement in credit markets seen in recent weeks.
Resources doing nicely today along with the rest of the market. BHP up 99c to 4230c and RIO up 452c to 13952c. Metals mostly up overnight, Zinc up 4.2%, Copper up 1.6% and Aluminium 0.1%. Nickel the only metal to lose ground, down 2.2%. Zinifex up 30c today to 1415cb – the stock has been struggling recently, down 23% in the past month after company presentations predicting a weak zinc price outlook. Oil price down $3.68 or 4.1% to $90.71. Woodside up 30c to 4828c. Gold down $13.70. Newcrest underperforming today, down 26c to 3374c.
- GrainCorp (GNC) getting smashed this morning, down 6.7% to 900c, after announcing a $19.9m loss for the year on the back of a sharp reduction in grain receivables due to the drought. Not good considering they nailed a $31.7m profit last year.
- David Jones (DJS) up a bit on its AGM today. No great new news. They reiterated FY08 forecasts for 8% to 13% growth in underling profit ,with MD Mark McInnes saying, “We are well positioned to capitalize on the expected strong consumer sentiment throughout calendar 2008”. DJS up 7c to 490c.
- Good news for Woolworths – the NZ High Court has overturned the Commerce Commission ruling and has cleared Woolies to bid for NZ’s Warehouse. Warehouse shares shot up 24% on the back of the announcement. Foodstuff will also be having a crack but WOW is expected to secure the merchandise store. WOW up 57c to 3259c.
- National Australia Bank (NAB) announced they have acquired US, South Dakota based Great Western Bank for US$798m. Venturing into the US banking market in the middle of sub-prime fall out. They say it will provide a springboard for its agricultural banking in the US. NAB up 33c to 3974c.
- Because of the poor performance associated with their private equity key investment vehicles Babcock & Brown Capital (BCM) has called for a general meeting to vote on the sale of those investments. London registered hedge fund, PendVest, who owns 5.02% of BCM also wants a general meeting to consider a cash capital return to shareholders of $425m. UBS Warburg maintain their BUY recommendation and 630c target price on the stock. The stock is up 7% today.
- Perpetual Trustees (PPT) have provided an update on credit markets this morning and have revealed some losses. The deterioration of the global credit market since the beginning of this month has resulted in further price falls for securities held in its Exact Cash Fund. It has market-to-market losses of around $18m before tax, and about $5m of the losses are sub-prime related and are not likely to be recovered. PPT has been hit hard in the past month losing 9% of its market cap. They will take the $18m as a significant item in their next results. In a market up 107 points this morning, Perpetual is down 45c to 6783c. Aspect Huntley has a BUY recommendation on PPT at the moment. It is on a PE of 17x and a yield of 5.9% which is 100% franked.
- On the diary in the US tonight we have preliminary 3Q GDP, 3Q Chain Deflator, weekly initial claims and new home sales figures. Twenty three companies have results before the open, including Sears.
- Companies going ex-dividend include FPH and SPN.
RBA Meeting next week.
We have an article in the MARCUS TODAY Daily Stockmarket Newsletter this morning looking at the “Magnificent Seven” performance in our market making the point that although the ASX 200 or All Ords index has done very well in the last year or four, if you didn’t hold a couple of stocks then your performance will come nowhere near. The index is like a rock in a sock… dominated by a few stocks at the big end of the market.
MARCUS TODAY – “Inform, Explain, Educate, Entertain”.
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