The market is DOWN 5. The SFE Futures suggested a 21 point fall in the market this morning.
The Dow Jones was down 96.9 – It moved in a relatively large 139 point range and closed down on the back of Federal Reserve Chairman Ben Bernanke telling Congress that the economy is not heading for a recession but interest rates are not likely to be cut any time soon due to inflationary concerns. A higher oil price doesn’t help the problem, it hit a six-month high overnight. Talk is that Iran fired a missile at an American ship in the Persian Gulf, something the US military has denied. Homebuilders closed down a big 2.5% (worst sector), many are not convinced the property market has bottomed and that it may affect the broader economy. The Dow has now lost 180.5 points since the week began…after a record rise last week it is clear that the volatility, uncertainty and risk remains.
Resources down today. BHP down 15c to RIO down 77c to 7753c. Metals mixed overnight, Zinc up 0.3%, Zinifex unchanged at 1644c. Aluminium down 0.1% and Nickel up 1.4%. Copper down 0.3%. Oil price up $1.13 to $64.11 on the back of declining inventories in the US and rising tension between Iran and the West (15 sailors still in Iranian custody and a 26 year old female navy prisoner appeared on TV in a burka saying they were being well treated). It closed at its highest close since September last year, but is still way off the $78 a barrel record it set in July 2006. Woodside up 14c to 3936c. Gold up $4.30. Newcrest down 15c to 2340c.
Market looks a little undecided, much like yesterday. Property trusts are doing well, building stocks not so good (Goldman Sachs JB Were has downgraded them all today). Rinker (RIN) and James Hardie (JHX) have been hit hard in the past couple days on the back of disappointing US building figures released earlier in the week. Both companies earn a good chunk of their profits in the States.
- There has been some heavy trading in Qantas (QAN) today. Around 3% of the stock (62m shares) changed hands in the first 20 minutes, including 58m crossed by one broker at 519c. Takeover is looking less and less likely as each day passes. QAN unchanged at 519c.
- ABN AMRO has come out with a BUY recommendation for News Corp. ahead of its Australian index re-inclusion in June. It has a 3480c target price against a 2690c price.
- The AFR has reported that 20% shareholder of Queensland Cotton (QCH) is seeking legal advice regarding the $134m bid from Olam. Not going to be a smooth acquisition one would think. QCH up 3c to 490c.
- Arrow Energy (AOE) up 12c to 170c after increasing its proved and probable gas reserves by 44%.
- Ten Network (TEN) down 2c to 314c receiving a few downgrades from brokers today after yesterday’s disappointing 1H NPAT profit result of $37.7m. Share price didn’t move much…investors saw no comment regarding CanWest’s stake sale process and that was enough….results a bit irrelevant until that issue is sorted and it doesn’t look like getting sorted in the short term.
- Cochlear (COH) down 43c to 6255c after being labelled as a possible takeover target for US-based Medtronic who is scouting for acquisitions.
- WH Soul Patterson (SOL) down 7c to 918c after reporting a 9.7% fall in 1H net profit to $38.8m without a lot of good news from its investments. Management said the result was unacceptable.
Fascinating interview on Lateline on Tuesday with global economist David Hale. There is a summary of the interview in today’s edition of the MARCUS TODAY newsletter. His comments about Greenspan are worth the read alone. He suggests he is making up for 18 years of being underpaid with post FOMC talks and books.
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