Morning Market Report, Nov 22, 2007

The market is down 36 – not a bad result considering the SFE Futures suggest a 60 point fall in the market this morning. Retailers and some major industrials holding up whilst banks and resources fall over on US credit market worries and a savage fall in metal prices overnight.

The Dow Jones lost 211 overnight.

Resources struggling and underperforming this morning…BHP down 63c to 4042c and RIO down 205c to 12885c. Metals all down overnight, Zinc down a big 6.3%, Copper down 4.3% and Nickel 2%. Aluminium down 0.9%. Zinifex down 39c to 1465c. All zinc stocks down. Perilya down 5%. Kagara down 3.3%. CBH down 5.7%. TZN down 7.4%. Oil price down 59c to $98.57 after the Energy Department said supplies in the Midwest increased for the first time in weeks. Almost hit $100 overnight. Woodside down 24c to 4788c. Gold up $7.20. Newcrest down 20c to 3330c.

We’re a little quiet today…

Australian World Exploration (AWE) announced this morning a reserve review of their Tui Area Oil Project has resulted in an increased estimate of oil reserves by 30% to 41.7m barrels compared to 27.9m barrels initially estimated. AWE share price has stalled recently, down 9.2% in the past quarter but up 17c today to 303c.
Yesterday was one year from the listing of Telstra instalments (T3). On that basis original holders can now sell Telstra using the 50% CGT discount for assets held for more than a year. TLSCA fell 4c to 302c. Not far… probably because holders will get a one for 25 bonus share if they hold until the final instalment in May. TLS up 3c to 457c.
Macquarie have announced it will take a 19.4% stake in stockbroker Tolhurst (TNL) this morning through a placement (16m shares at 50c) and through acquiring another 13.8m shares at 50c…cementing an “ongoing strategic relationship” between Macquarie and Tolhurst. They will also “review opportunities to improve research and advisory services”. TNL up 11% or 5c to 50c.
ABC Learning (ABS) had been hit hard by the struggling US$ recently, it announced yesterday it is looking for 15% earnings growth instead of the 20% they had previously forecast. Despite the downgrade, Citigroup maintained their HOLD recommendation and 766c target price. ABS down another 30c today (5.5%) to 517c.
AWB announced earnings numbers yesterday – profit down 56.9% to $45.6m. Most brokers remain Neutral on the stock although ABN AMRO have upped their recommendation to BUY from HOLD and their target price to 336c from 346c. AWB down 1c to 269c.
Wesfarmers bucking the trend again today. Up 21c to 4150c. They are gathering pace with the takeover of Coles officially happening tomorrow. They were 3986c a week ago.
Service Steam (SSM) has extended its infrastructure deployment contract with Telstra (TLS) for 2 more years. SSM down 9c to 195c or 4.4%.
Goldman Sachs JB Were have initiated research on Mt Gibson Iron (MGX) with a HOLD recommendation and a 258c target price. Last 230c down 21c or 8% today. They have had their AGM today. ABN AMRO have upped their 2008 iron ore and coal price forecasts this morning. Now looking for a 35% rise in iron ore (up from +25%). Consensus is still 45-50%.
Were’s have initiated research on Sundance Resources (SDL) with a BUY recommendation and a 70c valuation. Last traded at 49c up 2c. This is the company that was bid for by Gindalbie Metals but the deal fell over.
Nickel stocks getting belted after recent falls in the Nickel price. Sally Malay down another 3.0% today to 514c. They have lost 14% in the past week but are still up 187% this year. Other nickel stocks also down. MRE down 3.8%. MCR down 4.7%. IGO down 7.6%. MBN down 5.6%.
AWB and St. George Bank go ex dividend tomorrow, 4c and 86c respectively.