Morning Market Report, Mar 27, 2008

The market is down 27. The SFE Futures suggested a 38 point fall in market this morning. The ASX 200 is 5.8% off its low and 21.2% off its all time high. The Dow is now 5.8% off its low and 12.3% off its all time high.

Dow Jones closed down 109. It has rallied 425 points in three sessions. It was down 155 at its low. Financials closed down on a broker downgrade to the biggest four banks on concerns about write-downs on CDOs and mortgages. JP Morgan down 4.2%. Citigroup down 5.9% Bank of America down 2.8% with Goldmans also downgrading earnings forecasts. Commodities did well – CRB index up 2%. Freeport Mc Moran up 5.4% with talk they could bid for CVRD. Oil up on crude inventory numbers that came in lower than excepted. And Treasury Secretary Paulson proposed more regulation for investment banks that borrow from the Fed (not good for share prices) and the White House is coming up with a plan to control volatility in financial markets. In economic news, Durable Goods numbers fell 1.7% – more than the 0.7% increase expected – second monthly fall on the trot after a 4.7% fall in January and New home sales fell 1.8% in February, a soft number (13 year low – slowest pace since 1994) but better than expected.

Resources up 0.7% this morning and outperforming a market down 0.5% and financials down 1.4%

Both BHP and RIO up in ADR form overnight, 1.13% and 2.5% respectively. BHP up 35c to 3566c and RIO up 258c to 12085c.
Metals mostly up overnight – Aluminium and Copper both up 1.3%, Nickel up 0.8% and Zinc was unchanged. Zinifex unchanged at 994c.
Oil price up $4.05 or 3.8% to $105.83 after the Energy Department said crude oil inventories were unchanged for the week. Analysts expected supplies to increase by 1.7m barrels. Woodside up 62c to 5361c.
Gold up $14.20. Newcrest up 87c to 3349c.
Bonds up with the 10 year yield up to 3.49% from 3.51%.

Glenn Stevens shed little light on Australian Monetary Policy this morning, preferring to focus primarily on the international scene and the instabilities stemming from the global credit crisis. He said that the “Reserve Bank’s Financial Stability Review being released later this morning says the Australian economy is weathering the storm well. Profitability remains very strong and capital sound.” General conclusion is that interest rates are now on hold.

There is a bit going on today…

Spotless has bid for Programmed Maintenance Group (PRG). SPT bids for PRG offering $6.11/share (PRG last traded at 558c up 22%) Three different cash and scrip alternatives for PRG to consider. SPT down 5% to 343c.
Nufarm interims results are out. Operating profit came in at $35.4m up from $7.5m, excluding one-offs. In line with the company forecasts. NUF down 2.5% to 1636c.
Babcock & Brown have announced a range of new funding initiatives. 25 banks (up from 20) have formally committed to participate in the expansion of a corporate debt facility to $2.8bn (up from $2.35bn) and roll it over until 2011. BNB down 51c to 1449c.
Brickworks (BKW) announced its 1H profit result. Up 9.7% to $40.3m. BKW unchanged at 990c.
ABC Learning (ABS) – There is talk on a favourable outcome from talks with Morgan Stanley Private Equity on the sale of 60% of its U.S. assets. ABS up 7.4% to 143.5c.
National Australia Bank has raised $725m through its existing June 2011 notes. NAB down 35c to 3000c.
A class action lawsuit against AWB Ltd has been dismissed by a US federal court judge. AWB up 11c to 266c.
Leighton Holdings have announced $300m worth of contracts. LEI down 31c to 4069c.
Rio Tinto has been granted mining rights by Peru in 18 lots less than 50km away from Peru’s border with Chile and Bolivia. RIO up 261c to 12085c.
A day after David Jones announced impressive results, its rival Myer Group announced a 37% increase in 1H net profit of $78m despite revenue falling 1.9% to $1.63bn from $1.66bn. DJS down 10c to 361c.
Qantas January traffic statistics up 5.6%. QAN down 5c to 391c.
Chris Scott, David Burke and Graig Chapman have joined MFS as Directors. MFS unchanged at 99c.
Market still waiting on Ten Network’s result. JP Morgan expects a 1H net profit of $94.6m. TEN up 1c to 223c.
Seven Network goes 17c ex-dividend today. SEV down 30c to 956c.