Midday Market Roundup 17/07/08

Sydney, July 17, 2008 (ABN Newswire) - The market is up 46. Financials up 3.7% after a massive bounce in financials in the US overnight. Resources completely left out of the bounce - down 2.3%. SFE Futures were up 66. 



Dow up 277. Up 281 at best. Down 45 at worst. Rose all session. Financials flew – had their strongest rebound ever after their steepest ever 5-day retreat. Comments about bargain hunting and short-covering. Second big fall in the oil price in two days - down 3.1% and down $10 over two days. Highest monthly CPI number since 2005 (after hurricane Katrina) and the second highest in 25 years. US dollar up with talk of rate rises by year end. Good results from Wells Fargo (5th largest US Bank) provided a lead in financials. They raised their dividend (on "optimism about the future") and quarterly profit was down 23% but ahead of consensus – up 32.76% - biggest rise since 1980 – blamed on short covering. S&P financialsindex up 12.3%. The largest gain since the index's inception in 1989. Most banks up at least 10%. JP Morgan, Citigroup and Bank of America rallied hard - up 16%, 13% and 22%.



Consumer and discretionary sector up 4.4%. Retailers jumped 5.5% on the oil price fall. Airlines up 18% on lower oil prices and better-than-expected earnings from American Airline parent AMR Corp (up 32%) and Delta Airlines. Homebuilders soared 14% and the building products group jumped 11%. Tech sector up a relatively passive 1.5% even as Intel's results topped estimates and rose 0.97%. Energy sector down 2.6% on falling oil prices after a surprise increase in US oil inventories. Defensive utility sector down 2.0%. Bernanke says Fannie Mae and Freddie Mac are "adequately capitalized. They are in no danger of failing" and the "best solution" is to keep them "in their current form" as opposed to having the government take them over. Resources underperform – metals all down. 2Q result profits fell only 0.8% on average for the 26 companies having reported so far.


Both BHP and RIO down in ADR form overnight, 0.91% and 2% respectively. BHP down 126c to 3803c. RIO down 403c to 11741c.

Metals all down overnight – Zinc down 2.58%, Aluminium down 3% and Nickel 2.2%. Copper down 0.5%.

Oil price down $4.05 to $134.63 – having lost more than $10 in the past 2 days – despite the sell off, the price remains around 80% higher in the past year and up around 40% since the start of the year. Woodside down 21c to 5934c.

Gold down $16 to $962.70. Newcrest down 74c to 3256c.

US Bonds down with the 10 year yield up to 3.94% from 3.82%.

In the news

Woodside's (WPL) 2Q report described as a bit disappointing. Shares initially fell 1.1% on announcement helped by a lower oil price overnight. We can worry about the numbers all we like on Woodside but the truth is this…oil price up….Woodside up. Oil price down…Woodside down.

Iluka Resources (ILU) posted sharply lower 2Q output as a result of the WA gas supply disruptions. In line with expectations. ILU up 4c to 433c.

Kagara Ltd (KZL) posts quarterly production numbers which are described as good by most brokers – although it hasn't done the share price any good. KZL down 16c to 330c. It is down 32% in a month on the back of a falling zinc price.

Qantas (QAN) up 4.1% on the fall in the oil price and talk they are going to slash 2000 jobs next week – a company review is planned to combat soaring fuel prices. QAN up 13c to 330c.

Allco Finance Group (AFG) have reduced their senior debt commitments by $230m having completed the sale of their Tehachapi Wind Project. It was expected. AFG up 4c to 46c.

Newcrest Mining (NCM) received approval from the Papua New Guinea government for a gold JV with South Africa-listed Harmony Gold Mining Co. NCM down 72c to 3258c with the $16 fall in the Gold price overnight.

Woolworths (WOW) still showing interest in buying NZ's largest food retailer, the Warehouse – the suggested takeover still awaits NZ court of Appeal approval. WOW up 4.82% or 122c to 2548c.

CapeLambert Iron Ore (CFE) could be in the sights of Russian billionaire Roman Abramovich, part-owner of Russia's biggest steel maker Evraz Group, as they are thought to have exercised 56 million options through a Merrills nominee company. CFE up 2c to 75c.

Transpacific Industries Group (TPI) received approval from the environmental regulator to build a new hydrogenation oil recycling plant in Dandenong, VIC – TPI is Australia's largest waste management company. TPI up 17c to 652c.

Toll Holdings (TOL) - TOL up 10.13% to 636c as cyclical stocks bounce back from deep falls on the 10% fall in the oil price in 2 days.

Tabcorp (TAH) manages to fall on an up day as ABN AMRO labels it "not cheap".

Paladin Energy (PDN) posts 4Q output from its Langer Heinrich operation in Namibia 12% below plant capacity due to operational problems. Uranium spot prices fell from US$71 to US$59 a pound over the quarter. PDN said a fundamental uranium supply shortage due to growth in nuclear power will lift prices in the mid term. PDN down 4.72%.

Queensland Gas (QGC) to explore and commercialise any new coal seam methane gas potential through their fully supported bid for Roma and potential takeover.  QGC down 4.76%.

Nickel stocks belted yet again. Panoramic, Minara, Mincor and Independence all down around 20% in a week.

Copper stocks close behind.

Oil stocks flat on the fall in the oil price.

Gold stocks down on the $16 fall in the gold price.


 

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