The market is down 32 recovering slightly after falling as much as 60 points on open. The SFE Futures suggested a 63 point fall in the market this morning.

The Dow Jones was down 148 overnight moving in a 153 point range and closed down for the first time in three sessions on sub-prime mortgage market concerns and worries that the upcoming earnings season will not live up to expectations. Despite a fall in bond yields, the Dow Jones finished 1% lower as several companies either reported lower-than-expected earnings or lowered earnings guidance. American Express, DR Horton and Wal Mart all closed down, Sears Holdings fell 10%; it was the biggest loser in the S&P 500 after announcing 2Q profit will suffer due to falling sales. Automakers had a good session; General Motors closed 1.7% higher after JP Morgan upped their recommendation on the stock to “overweight”, Moody’s cut their credit ratings on $5.2 billion worth of bonds backed by sub-prime mortgages and the US Home Construction index fell 3.1% to a 4 year low. It was an ugly session for all three major indexes, the NASDAQ lost 1.2% and the S&P 500 1.4%.

Resources doing it hard today. BHP down 61c to 3783c and RIO down 204c to 10145c. Metals all down overnight, both Copper and Zinc down 1%, Aluminium down 0.1% and Nickel down a big 5.4%. Zinifex down 30c to 2020c. Oil price up 66c to $72.80 on unrest in Nigeria and concern that unexpected shutdowns of oil refineries will cause a fall in supply. Woodside down 16c to 4661c.

Not surprisingly the market took a breather yesterday and is doing the same today. The market is up 3.5% this month already. This is a huge huge rise (equivalent to a 145% rise in the market annualized). It suggests that the new super money is being dropped into the market early in July. If you think about it….the big institutional super funds are almost certainly flooded with cash. They simply won’t be selling at the moment. Looks like July could be a big one – as expected. Companies with big overseas earnings not doing well today. Lot of profit taking in resources.

  • Lots of positive broker research today on Woolworths (WOW) after their impressive 4Q sales numbers and profit upgrade yesterday. They reported their best quarterly sales performance in 20 years and expect NPAT to reach $1.29bn. WOW down 34c to 2785c. It was up $2 ahead of the announcement.
  • G.U.D Holdings (GUD) announced a bid approach yesterday afternoon in response to a price query – seems everyone that traded in the stock in the run up from 918c 7 days ago knew more than they should. GUD sells “Consumer Products” including the brands Sunbeam, Victa and Automotive Products Ryco, Wesfil etc. It used to be that you could just buy any stock that had an approach and make money….such was the tide of private equity interest. But the private equity guys have been backed off by the bond markets. It is now gambling not a sure fire investment to buy stocks on a bid (just ask Orica traders who bought after their bid announcement). GUD up 3c to 1104c.
  • Nickel stocks getting smashed after a big 5% fall in the Nickel price overnight. Nickel price is down 25% over the past month, main reason seems to be supply concerns with LME stockpiles increasing 5.5%.
  • United Group (UGL) announced they expect FY07 net will exceed $90m, up from $78.7 in FY2006. They also announced the acquisition of Unicco Service for $477m and expect sales revenue forecast to hit $4bn, nearly double that of last year. UGL up 20% in the past 12 months.UGL in a trading halt.
  • Macquarie Bank doing worse than most on concerns about the knock on effects of the subprime mortgage market in the US on other debt and financing exposures. MBL down 187c to 8648c.
  • Publishing & Broadcasting (PBL) beginning to turn after the Melco JV bottomed and rose on NASDAQ. We still have the split into Media and Gaming to come (an announcement that was very well received initially). (MPEL was down 2.37% overnight) There is also talk in today’s AFR Street Talk that James Packer could privatize PBL’s Gaming division after the split. PBL down 15c to 1940c.
  • Note the bid speculation still coming out of the Zinifex (ZFX) price – down 26c to 2014c today. It peaked at 2132 a couple of days ago on rumours of an Oxiana (OXR) bid. Down 5% in two days.
  • Talk that Harvey Norman results will surprise on the upside (note it was up 2% yesterday against a market that fell). HVN up 3c to 541c.
  • PaperlinX is a well known sufferer from a high A$ – Goldman Sachs JB Were cut their forecasts by 6.1%, 28.3% and 11.2% yesterday on currency forecast changes. They also dropped their recommendation and valuation. PPX down 1c to 352c.

We have an article in Marcus Today today about the reality of insider trading. It is an everyday event…no good denying it. Many live of it. But my opinion is that if they really wanted to do something about it they are going about policing it the wrong way. Rather than targeting the traders (which is obviously – from the number of convictions – almost impossible to prove or police) they should target the companies that leak information (they are not hard to spot – there are speeding tickets all the time) and appeal to their management to eek out the leak in the loop that damages their image. After all, institutional investors hate leaky companies. If you want serious investors in your company you simply have to plug the holes. If companies like Wesfarmers can keep a bid for Coles under wraps…anyone can keep a secret. Speeding tickets mean leaks. How many have you had? If the ASX really want to make a difference from all their vigilance they should count up the tickets and publish the list of shame. Charge them a few grand per ticket for your time whilst you’re at it. Then the board members who are being shamed will seek out the problem. Or of course we could just leave everything as it is…after all…inside information creates a heck of a lot of trade (good for the ASX) and opportunity/volatility/liquidity (good for traders).

THE MORNING MARKET REPORT is provided by the MARCUS TODAY daily stockmarket newsletter. You can subscribe for a free five-day trial here.