Morning Market Report, Oct 18, 2007

The market is up 63 – The SFE Futures suggested an 8 point rise in the market this morning.

The Dow Jones finished 20 points lower overnight – It moved in a relatively large 238 point range and finished lower for the third consecutive session for the first time in two months on the back of disappointing housing numbers. It was a volatile session on Wall Street; the Dow was up as much as 99.9 points at one stage and down as much as 138.2. The Commerce Department announced new home construction fell more than forecast to a 14 year low in September, down 10.2% to an annual rate of 1.191m, building permits fell 7.6% to 1.226m. eBay, Yahoo, Intel and Coca-Cola all beat analysts expectations, JP Morgan said earnings increased by 2% despite big writedowns due to the subprime mortgage market, yet Thornburg Mortgages closed down 12%, they were forced to sell $21.9bn worth of assets at a loss in August and announced they wont be paying a dividend for the first time in their 14 year history. The NASDAQ finished 1% higher; it is now up seven of the last ten sessions. Yahoo closed up 8% after announcing better-than-expected 3Q earnings numbers yesterday.

Resources doing well today…BHP up 41c to 4671c and RIO up 66c to 11066c despite being down 2.1% in ADR form overnight. Their 3Q production numbers yesterday have been described across the board as disappointing this morning with very few surprises. Merrill Lynch maintained their 12000c target price saying most of the disappointment came from problems beyond Rio’s control. ABN say the lower production result with have a positive influence on pricing dynamics. Metals mixed overnight, Copper down 1.1%, Zinc down 2.4%, Aluminium up 0.4% and Nickel was unchanged. Zinifex up 4c to 1758c. Oil price down 39c to $87.19 after a government reported showed higher-than-expected oil inventories. Tensions in northern Iraq continue to cause concerns. Woodside down 78c to 5340c after cutting their FY year production forecast and saying their 3Q production fell 8% for the year – output was down to 17.6m barrels, so was revenue, down 15% from last year to $964m. Gold up 30c. Newcrest up 12c to 2837c.

JB Hi-Fi (JBH) – up 17c to 1542c – They have reiterated their FY earnings guidance at the UBS Emerging Companies Conference. They expect sales to increase by 33% to $1.7bn and consumer confidence to remain strong heading into Christmas. Their ‘stake them high, watch them fly’ model is exceptional and management, led by CEO Richard Uechtritz, has a black belt in sensibly growing market share and earnings. Uechtritz has over 20 years of retailing experience and owns over 4m shares in the company. In June, the company reported a better-than-expected 56% increase in NPAT to $40.4m. The stock is up 175% in the last 12 months.
Illuka (ILU) down 12c to 507c – they had production numbers this morning – Not good. Output down 13% due to bad weather but sales were up 26.8% on deferred shipments. ILU down 13% in the past month.
According to the AFR, Qantas (QAN) might be merging their holiday’s business with travel agency Jetset Travelworld (JET). QAN up 5% in the past month despite the oil price hitting record highs.
Arrow Energy (AOE) and Liquefied Natural Gas (LNG) announced this morning they have agreed to gas supply terms for their planned liquefied natural gas plant at Gladstone in Queensland. AOE up 3c to 245c, LNG up 2c to 72c.
Centennial Coal (CEY) said they have sold their Anvil Hill mine in New South Wales to Xstrata for $453.3m with an additional $25m to be paid down the track when project transitional issues are resolved. The funds will be used to repay debt. CEY up 1c to 389c.
The a bottle of Moet ready if you’re an Internet Resources (ITT) shareholder – up 94% to 34c on news of an iron ore find at their Paddy exploration lease in QLD.
The odds of an interest rate increased have fallen to 44% from 48% according to Credit Suisse. The brokers also said the odds of a rate hike over next year have also fallen to 36% from 41%.
Companies going ex-dividend today include: ASP, JST and SRH.