The market is up 131. It was up 161 on the open. Flying on the back of Wall St and the FOMC decision to cut rates 50bp. The SFE Futures suggested a 140 point rise in the market this morning.
The Dow Jones was up 335 overnight – It moved in a 336 point range and finished nearly 2.5% higher after the Federal Reserve cut interest rates by a larger-than-expected 50bp. After keeping rates unchanged for more than a year, the Fed helped the Dow index record its biggest one day gain in nearly five years after announcing they would cut the benchmark lending rate to 4.75% from 5.25%. First cut since 2003. In their accompanying statement, the Federal Reserve said “inflation risks remain” and that they will continue to monitor developments, but their main concern has now switched to the health of financial markets and the availability of liquidity. Investment banks went gangbusters, Lehman Brothers closed up 10% despite announcing a 3.2% fall in 3Q earnings on write-downs of mortgage securities, Goldman Sachs put on 7%, Morgan Stanley 5.5% and Merrill Lynch finished 4.1% higher ahead of their results. The S&P 500 closed up nearly 3%. Four hundred and ninety stocks in the index closed in positive territory, the broadest gain in 11 years and the NASDAQ also had a good session and put on 2.6%.
Resources doing well today (Resources up 3.2% versus Industrials up 1.7%)…BHP up 143c or 3.7% to 4008c – hit a new all time high of 4024c – and RIO up 294c or 3% to 10045c. Metals all up overnight. Nickel up a big 5.7%, Zinc up 2.1% and Copper 1.1%. Aluminium up 0.5%. Zinifex up 47c to 1641c. Oil price up 96c to $81.51 and closed in record territory after of the Federal Reserve cut interest rates and eased concerns about a slowdown in the global economy. A government report tomorrow is also expected to show a fall US crude oil supplies for the 10th time in 11 weeks. Woodside up 125c to 4710c. Gold down 10c but touched an intra-day high of $US726.95. Newcrest up 95c to 2725c. The stock is up 20% in the last week. Goldman Sachs JB Were have upgraded their oil price forecasts with related earnings increases for companies affected. They prefer Woodside (target price 5150c) and AWE (target price 400c). Their preference for BHP over RIO is reinforced by the change in oil price assumptions. BHP target price 4423c. RIO target price 10814c.
- Although irrelevant for shareholders, Coles Group (CGJ) announced this morning FY07 NPAT fell 36% to $747.8m. After taking out the costs associated with the sale process, net profit increased by 0.6% to $792.4m, mainly in line with the $787m analysts had expected. It’s clear that Woolworths (WOW) has taken CGJ to the cleaners. WOW’s announced an 8.2% increase in 4Q sales, and although CGJ didn’t mention what their 4Q sales numbers looked like, like-for-like 2H sales at their core food and liquor divisions increased by a measly 0.6% (WOW was up 8.2% in the 4th Q) indicating lost market share. CGJ up 13c to 1498c and WES up 41c to 3979c. WOW up 42c to 3000c.
- According to the AFR, SP AusNet (SPN) are set to buy $4bn worth of ex-Alinta assets from Singapore Power and are planning a $3bn rights issue. SPN said the two parties are continuing discussions and expect an offer to be made to them in the near future. SPN up 2c to 140c.
- Adelaide Bank (ADB) have denied this morning that they asked for liquidity assistance from the Reserve Bank of Australia and labeled the rumors as completely false. ADB is up 74c or 5.4% to 1445c today and has made up part of the 7% fall in its share price yesterday.
- Pan Australia (PNA) up 5% to 76c after announcing plans to expand their Phu Kham Copper-Gold Mine in Laos from 12mtpa to 16mtpa by 2011. Managing Director Gary Stafford said, “The current mine development is running ahead of the scheduled mid-2008 start up and within the US$241m budget”. PNA has nearly increased in value by 200% in the past 12 months.
- Queensland Gas (QGC) announced a FY07 net loss of $12.2m compared to the $6.3m loss is recorded last year. Operational profit was $23.8m, up from $1.7m and revenue increased by 91% to $34.5m from $3.1m. QGC aim to achieve gas sales of 30 petajoules this fin year. QGC up 7c to 237c.
- Sigma Pharmaceuticals (SIP) announce 1H results tomorrow. Credit Suisse expect a $35.7m profit excluding restructure and rationalization costs. SIP has been a ‘dog stock’ in the past 12 months, down 42%, on the back of profit downgrades and CFO John Cullity handing in this resignation after just a year in the job with no reason given. SIP up 3c to 147c.
- Unwired (UNW) up 8.5% on a 20m share crossing at 45c when the share price was 41c. Seems UNW themselves don’t know who has sold (could be Seven, Engin or Tiberius) or who has bought.
- Emeco (EHL) is up 2.2% on an Open Briefing announcement.
- Lihir (LGL) started trading on the Toronto stock exchange overnight. Went from open price of C300c to C320c. 3% of the shares are listed there at the moment.
- Companies going ex dividend today include – APD, IFL, MMS, RRT.
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