The market is down 16 despite opening in positive territory. It has been down 40 at its worst so far. Banks are the main problem. The RBA have injected funds into the banking system again and the US continues to struggle under the weight of financial markets losses with Freddie Mac down 29% overnight with talk of dividend cuts, the need for a capital raising and higher provisions against loan losses. The SFE Futures suggested a 32 point rise in the market this morning.

The Dow Jones closed up 51 overnight – It moved in a relatively large 267 point range and finished a volatile session in positive territory despite disappointing economic forecasts from the FOMC and lower than expected earnings results. The bad news – the Federal Reserve said it expects US economic growth to slow next year (to 1.8% to 2.5% down from 2.5% to 2.8%) and unemployment will rise because of the depressed housing market and the credit crunch. The good news – Inflation will moderate meaning an increase in interest rates shouldn’t be needed. The market was somewhat surprised by the detail of the Minutes which suggested the rate cut last month was only just voted through.

Resources outperforming today after getting smashed yesterday. BHP up 59c to 4089c and RIO down 46c to 13144c. According to Were’s, a combined BHP/RIO would represent 15.7% of the S&P/ASX 200 when taking into account the fact the RIO shareholders are being offered to convert their scrip. Metals slightly up overnight, Aluminium up 1.4%, Zinc up 0.2% (it fell 7% yesterday) and Nickel up 0.3%. Copper was unchanged. Zinifex down 18c to 1455c. Oil price up $3.41 to $99.16 on speculation the Fed will continue to cut interest rates so boosting economic growth. There was also talk of refinery problems limiting supplies. Woodside up 58c to 4839c. Gold up $13.40. Newcrest having a great day, up 4.6% to 3351c.

In the news:

  • Lion Nathan – Results a bit better than expected. LNN have announced a 4% increase in FY operating profit this morning. Reported net profit (inc. sale of brewery) up 24% to $282.1m. LNN is looking to expand its market share; it bought James Boag for $325m not to long ago. LNN up 12c to 905c.
  • SP Ausnet (SPN) results are OK. Up 23% and ahead of forecasts. Made $119m against forecasts of $113m and says it is on track to meet forecasts for the full year. The stocks is down 7% this year. They are buying $8.3bn of Alinta assets making it the largest energy transmission company in Australia. SPN up 1.5c to 124c.
  • AWB Final results are out – IN LINE – Underlying profit in line with earnings guidance. NPAT down 53% to $27.1m after $30.9m of write-offs including $15.4m for redundancies. That compares to guidance of $25-30m given last month. Good statement. They are within 52c of their all time low. AWB up 11c to 279c.
  • PROFIT WARNING – Funtastic (FUN) are out of a trading halt after providing a trading update to the market. Profit downgrade and a strategic review. A “strategic review” is the equivalent of putting up a “for sale” sign these days. FUN down 28% to 84.5c.
  • According to the AFR, James Packers’s Crown is about to acquire the Chester Casino and Racetrack in Pennsylvania for $2bn, a sign that Packer isn’t wasting any time to spend the $2.7bn in proceeds from the PBL split which is expected to be finalized on Friday. The report appears to be on the money, PBL say in a statement this morning that they have started due diligence on the gaming business. PBL down 14c to 1942c.
  • Macquarie Group (MQG) down 67c to 7773c. They have bought the business and assets of CIT Systems leasing, a Bloomfield Hills equipment leaser. They will relocate its senior executives to CIT’s offices in Bloomfield to make integration a lot easier and will assume $160m of CIT’s bet along with acquiring its $700m worth of assets. The deal should be finalized by end the this year. Can’t find the price paid in the announcement.
  • AXA Asia Pacific (AXA) have published a strategy briefing for their Australian and NZ business. They talk about doubling the enterprise value in 5 years. AXA up 9c to 767c.
  • Incitec Pivot (IPL) is ex dividend 191c today. Price down 194c to 8482c.
  • AED Oil has had an AGM presentation published today. The stock is down 9% or 67c to 643c.
  • Some uranium stocks bouncing although Paladin is down 2.5%. It is down from 936c to 691c this month (-26%).

We have an article in the MARCUS TODAY newsletter today about making mistakes. In the words of Theodore Roosevelt:

It is not the critic who counts, not the man who points out how the strong man stumbled, or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes short again and again, who knows the great enthusiasms, the great devotions, and spends himself in a worthy cause, who at best knows achievement and who at the worst if he fails at least fails while daring greatly so that his place shall never be with those cold and timid souls who know neither victory nor defeat.

MARCUS TODAY – “Inform, Explain, Educate, Entertain”.

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