The market has opened down 160. The SFE Futures suggesting a 138 point fall in the market this morning. Report out a bit early today as we head off for Crown Oaks Day in Melbourne.

The Dow Jones took a beating overnight, down 360 – It moved in a 361 point range and was down nearly 3% on back of a weaker US dollar and concerns that the credit crunch will affect the wider economy. The financial sector received another battering, down 3.8%, falling to its lowest level since November 2005 as 92 of its 93 members went backwards. Goldman Sachs fell 3.5%, Lehman Brothers down 5.3% and Merrill Lynch declined by 3.64%. Morgan Stanley dropped 6.4% after two analysts forecast the investment bank might write down as much as $6 billion. According to a Royal Bank of Scotland report U.S investment banks and could be up for $250-500bn worth of credit market related writedowns in addition to $100m of losses suffered because of “Level 3 accounting rules”. Earnings results didn’t help the day. Time Warner announced a 53% fall in profit, earning $1.09bn in the last quarter on revenue of $11.68bn, and News Corp. disappointed with their result. 1Q profit fell 13% despite a 19% increase in revenue. GM also announced a $39bn accounting charge. It has been a volatile week on Wall Street, the Dow lost 360 overnight and put on 117 on Tuesday after having lost another 362 last Thursday. The NASDAQ finished 2.3% lower.

Lots of red around this morning…Resources outperforming industrials early on. BHP down 142c or 3.2% to 4344c and RIO down 172c to 11050c, it rallied hard yesterday towards the end of the session after BHP declined to deny of confirm a report in the Financial Times that they would bidding for it – a bit of an old story now. Talk of a $112 bid. Metals all down overnight, Copper down 2.4%, Zinc down 2.2% and Aluminium 0.8%. Nickel down 0.3%. Zinifex down 52c to 1485c. Oil price down 19c to $96.46 after reaching an intraday record high of $98.62. A government report announced a smaller-than-expected fall in U.S. crude stockpiles. Woodside down 89c to 5350c. Gold up $10.10, helping gold stocks outperform today. Newcrest down 39c to 3447c and Lihir Gold only down 6c to 432c. Goldman Sachs JB Were continue to favour gold despite it hitting a 27-year high saying they expect further $US weakness, inflationary pressures are building and that gold and gold equities have traditionally provided safe-havens during times of financial turbulence. Their favoured stocks are NCM with a 3500c target price, Lihir Gold (LGL) at around 450c and Avoca (AVO) with a 290c target price.

The US$ is in trouble. A$ trading at $92.55 this morning. Topped out yesterday at $93.99. Making the news…

  • Credit Corp Group (CCP) down 40% to 619c first this morning after announcing a profit warning after the market had closed yesterday. FY08 NPAT was revised down to $17m-$19m from $24m, a 25% downgrade.
  • News Corp (NWS) announced their 1Q results overnight. Revenue was up 19% to $7.07bn, much better than the $6.5bn analysts had expected, but converting it into profit was the problem, earnings down 13% to $732m. Comparing this result to last year’s is a little unfair because of one off investment gains. They did say the company was “on track” for the FY saying they are “comfortable” with expectation to increase operating income by a “low teens” percentage for FY08. NWS down 33c to 2391c.
  • National Australia Bank (NAB) have earnings numbers tomorrow and brokers are expecting a good result. The lads at Macquarie expect cash earnings of $4,246m and cash EPS of 259.6c. They also expect the bank to declare an 89c dividend, bringing the full year dividend to 176c.
  • David Jones have announced a 9.7% increase in 1Q sales this morning, up to $471.9m from $430.4m last year. The impressive part of the result was that sales excluding new stores rose 6.7%. DJS’s share price has had a great year, up 44% and is only down 4c today to 481c.
  • Good news for Leighton (LEI) shareholders from the AGM. They say 1Q operating profit will be 30% higher than last year. They have $23.5bn worth of work in hand at the end of September and have added another $2.5bn since then. LEI have had a phenomenal year; they recently bought a 45% stake in Dubai-based Al Habtoor Engineering and also own a 14.9% stake in rival Macmahon Holdings (MAH). The share price is up 192% this year, having outperformed the ASX 200 by 170% in the past 12 months. LEI seeing some profit taking today…down 349c to 5952c. It ran hard into the AGM. Up from 5434c to 6508c in the last month.
  • Companies holding their AGM’s today: ASF Group, Devine, Servcorp, Nomad Building Solutions, Seek, Admiralty Resources, Commoditel, Equity Trustees, Beacon Minerals, Mineral Resources, Monax Mining, Leighton Holdings, Transpacific Industries Group, Cue Energy Resources, Molopo Australia, Infochoice, Marengo Mining, Mount Burgess Mining, Vulcan Resources, Fortescue Metals Group, Waterco, AGL Energy, ResMed Inc and Hyperion Flagship Investments.
  • Companies going ex-dividend today include: ANZ (74c), CGO, ENV and WES (140c).
  • Next Week in the US: CPI (inflation) numbers. Retail Sales. Treasury Budget. PPI (Producer Price) numbers, NY Empire State index, Industrial Production, Capacity utilization.
  • Crown Oaks Day – another 10 hour drinks party in Melbourne

We are off to the Races for the rest of the day. Probably the best course of action in the current market. Come back tomorrow and see if it’s any better.

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