Market down 60 with industrials leading the way. BHP removing 7 index points.

Dow Jones down a modest 24. Up 1 at its best and down 98 at its worst. First fall in 5 days. Lowest volume day of the year. The Bank of England announced a huge 100bn injection. Bank of America (second largest bank) down 2.5% after results down 77%. Well below expectations. National City (biggest lender in Ohio) down 28% after worse than expected results. Merck, Halliburton, Weatherford and Hasbro all beat expectations. Tech sector up 0.8% after positive research about Apple – Apple up 4.4%. Energy sector up 0.9% with crude at record highs. Five of ten sectors up. Financials down 1.7% on bad numbers from Bank of America and National City (down 28% on results). In the UK the Royal Bank of Scotland fell 3% on a 10-12bn capital raising with comments that there is more to come. Texas Instruments down 2.22% in after hours trade on late results. One hedge fund manager commented that every quarter the banks predict the worst is behind us and every quarter they are wrong. This follows comments from Morgan Stanley and Lehman Bros CEOs in the last week that we are “80% through the credit crunch” and that the “worst is behind us”. Profits are up 5.2% this Q so far excluding financials.

  • Both BHP and RIO up in ADR form overnight, 3.2% and 3.11% respectively. BHP down 30c to 4369c. RIO down 139c to 14316c.
  • Metals all down badly overnight – Nickel down 4.7%, Zinc down 5.8% and Copper 2.3%. Aluminium down 1%. Zinifex down 12c to 1032c.
  • Oil price up 92c to $117.48 after the 150,000-ton tanker Takayama, owned by Japanese operator Nippon Yusen, got stuck off the coast of Yemen as it headed for Saudi Arabia. Attacks cutting Nigerian supplies and a Scottish refinery strike also threatened North Sea crude production. Woodside up 34c to 5844c.
  • Gold up $2.40 to $917.60. Newcrest down 53c 33208c.
  • US Bonds down with the 10 year yield up to 3.72%.
  • The research reaction to the Wesfarmers capital raising announcement yesterday is pretty good – some buy recommendations around. WES still in a trading halt.
  • T3 INSTALMENT DUE – Telstra investor relations are out marketing ahead of the T3 instalment due on 29 May. Some of their comments include that they are a shareholder friendly board and that their priority number one is shareholder returns. They have not promised to keep paying the 28c dividend per annum but with free cash flow steadily increasing to $6-7bn and with 10bn shares on issue you can do the math – they will maintain the dividend and one day increase it again. The basic message is that they will remain an income stock and if that’s what you are worrying about… don’t. 6.1% yield at the current price. TLS down 1c to 456c.
  • Newcrest Mining Ltd (NCM) 1Q Gold production up 13% yoy. Gosowong and Cadia Hill mines strong outputs. NCM down 53c 33208c.
  • Oil Search Ltd (OSH) said 1Q production fell slightly because of natural field decline – will review its full-year production guidance after Middle East and Africa asset sales and slower-than-expected PNG drilling. OSH down 5% or 27c to 493c.
  • Austar United Communications Ltd (AUN) 1Q earnings rose 9% yoy, with jump in subscribers. Announced a $300m return to investors through a buyback. 1Q 2008 EBITDA Up 32% on yr to $51M. 1Q EBIT up to $26m from $23.9m the previous year. Revenue up 14% to $152.5m. AUN down 4c to 134.5c.
  • Sino Gold Mining Ltd (SGX) announced granting of a mining license at its White Mountain gold development in Jilin Province in north east China. SGX down 29c to 516c.
  • Energy Resources of Australia Ltd (ERA) – Chairman’s address said 2008 sales to be in line with last year. Uranium production to be “normal.” ERA down 43c to 1972c.
  • Metcash Ltd (MTS) confirmed it will buy vitamin manufacturing and drug distribution units owned by Primary Health Care with Sigma Pharmaceuticals Ltd. MTS down 3c to 409c.

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