Morning Market Report, Oct 16, 2007

Our market has followed Wall Street’s lead overnight and is down 81 – The SFE Futures suggested a 43 point fall in the market this morning.

The Dow Jones closed 108 points lower – It moved in a 214 point range and finished nearly 1% lower led by the financial and homebuilding sector. The financial sector took a beating overnight after Citigroup raised their loan-loss provisions by a higher-than-expected $2.24bn, their CFO Gary Crittenden said late payments on home loans may worsen in the 4Q. In takeover activity, Tektronix Inc. closed up 34% to $37.85 after Danaher Corp. said it would offer $38 a share for the company to expand the products they offer, but SLM Corp. fell 5% on concern that its $25.3bn takeover by a consortium led by JC Flowers & Co. will be held up in court. The homebuilding sector fell 3.8%, UBS cut their recommendation on KB Home to “neutral” from “buy”, and JP Morgan said they expect “further downside” in other homebuilding stocks. The NASDAQ fell 0.9%, Biogec Idec finished 19% higher after shareholders activist investor Carl Icahn said he had received several expression of interests from potential buyers.

Resources also down… BHP down 38c to 4612c and RIO down 134c to 11198c. Metals mixed overnight, Copper up 1%, Zinc up 0.5%, Aluminium down 0.5% and Nickel down 0.2%. Zinifex down 29c to 1794c. Citigroup cut their recommendation to Hold from Buy and maintained their 1580c target price the Nyrstar IPO pricing range implies net cash of $1.5-$1.83bn, slightly below what they had forecasted. Oil price up $2.46 to $86.19 after OPEC said crude production by non-member countries is likely to be lower-than-expected. There is also concern that Turkey forces will pursue Kurdish rebels into Iraq and disrupt oil supplies. Woodside down 5c to 5445c. Gold up $8.40. Newcrest up 17c to 2802c.

Energy Resources (ERA) have released their 3Q production numbers – Not bad – 3Q Uranium production up 24% on last year and they reaffirmed their production guidance for 2008. They did mine 27% less ore in quarter due to flooding. ERA down 58c to 1900c.
Lots of downgrades for AGL Energy (AGK) this morning from brokers after cutting its profit forecasts yesterday. Goldman Sachs JBWere cut their target price by 27% to 1300c from 1636 and their EPS forecasts by 14% in FY08, 17% in FY09 and 15.0% in FY10. They say, “We believe the market will take time to get confidence back in the stock”. With the AGM season about to begin – lets hope other companies don’t come out with surprise profit warnings or else the market could be in for a bit of a shock. AGK up 10c today to 1312c after closing 16% lower yesterday.
The takeover battle for Travel.com (TVL) is far from over – travel company AOT Group have thrown themselves in the mix by raising their stake in TVL to 10.14% from 9.03% and creating a potential blocking stake to Wotif’s (WTF) bid. TVL told the shareholders yesterday to accept WTF’s bid over Webjet’s. WTF down 14c to 558c and WEB is up 0.5c to 151.5c.
Palmary Enterprises announced this morning they are waiving all remaining conditions of their 450c cash offer for Consolidated Minerals (CSM). Palmary tell CSM shareholders not to accept Pallinghurst’s offer as they may not be able to accept any “higher offer which may emerge”. CSM up 8c to 493c.
Babcock & Brown (BNB) announced they have sold 48.9% of a US shopping mall portfolio to Oxford Properties Group for an undisclosed price. Their JV with GPT Group (GPT) will retain a 51% stake in the portfolio. BNB doing it tough today, down 96c to 2704c.
CSL Ltd (CSL) down 141c to 9674c, they vote on 3 for 1 share split at their AGM tomorrow, if approved, it will become effective from the beginning of trade on Thursday 25 October.
Seek (SEK) have announced a new partnership – Yahoo!Xtra, one of NZ’s leading news and information portals, have signed a 3 year exclusive deal with the company. Yahoo!Xtra is a JV venture between Yahoo7 and Telecom NZ. SEK down 23c to 845c.
Valad Properties (VPG) have acquired 5 properties in the UK and Europe for $198.2m.
Companies going ex dividend tomorrow include – AMM, CIY and SEV.