The market is up 7. SFE Futures were down 37 first thing this morning.

Dow down 93. Closed under 11,000. Up 69 at best. Down 227 at worst.

More than $13 trillion has been wiped off the total capitalization of global equities since October. 2 stocks were down for each one up overnight. S&P500 at the lowest level since beginning of 2005. S&P Financials index down 3%. Insurers fell 5%. Bank sector down to 1996 levels. Oppenheimer’s Meredith Whitney said the banks ought to write down their home loans to represent the true nature of the US housing sector. Financials hugely volatile – closed minus 3.0%. Banks in the UK weak as well – RBOS down 7%. Financials fell 5.7% on the open on scepticism about the Government’s plan to rescue Fannie Mae and Freddie Mac, on the back of earnings numbers from US BanCorp and on a broker downgrade of AIG. Fannie and Freddie down 26% and 27%.

They have lost 61% and 69% this month. Washington Mutual defended its capital position and bounced 12%. Wachovia Corp (4th largest US lender) down 7.7% to 17-year low – Oppenheimer downgraded to underperform on “dramatically diminishing” earnings outlook” saying the prospects for shareholders are “bleak.” Energy fell the most – down 4.2% on falling crude prices. 4 sectors gained – Healthcare outperformed, up 1.3%, with positive earnings result from Johnson & Johnson. Resources down in the US and UK. PPI inflation reading mixed – Total PPI higher than expected – biggest rise in 27 years – BUT – Core PPI lower than expected. Weak June retail sales up just 0.1% – below the expected +0.4%.

  • Both BHP and RIO down in ADR form overnight, 3.23% and 3.91% respectively. Both down over 4% in the UK. BHP down 60c to 3876c. RIO down 251c to 11950c.
  • Metals mostly down – Zinc down a big 8.4% on suggestions Chinese zinc producers won’t cut production as expected, Aluminium down 2.82% and Copper down 1.4%. Nickel up 0.5%.
  • Oil price down 4.5% or $6.48 to $138.68 – the biggest drop in 17 years – OPEC predicted world oil demand will rise by 900,000 barrels a day in 2009, or 100,000 barrels per day less than this year. Woodside down 185c to 5958c.
  • Gold up $5 to $978.70. Newcrest up 52c to 3335c.
  • US Bonds up with the 10 year yield down to 3.82% from 3.86%

Surprisingly, Financials are up 1.2% despite the steepest 5-day decline in the US bank index in history – it has dropped to 1998 lows. Most banks up 2% or more. The better performance from the Banks today follows a 3.7% fall in the sector yesterday in a market down 105 when the Futures had suggested a 37 point fall. It seems our market over-reacted yesterday.

The banks are back to a 10x PE and a 10% yield.

Not all financials having a bounce. Babcock & Brown was down 5.7% yesterday and is down another 4.0% today. It is now down 79.4% from its highs. Macquarie was down 7.4% yesterday, is down another 0.3% today and is down 49.4% from the top.

BHP has taken 11 points off the ASX 200. The Banks have added over 20 points.

Resources are down 1.3%. Energy stocks down on a big fall in the oil price. Zinc stocks (OXR down 3.2%, KZL down 5.2%) taking a beating from an 8.4% fall in the zinc price overnight as Chinese producers failed to agree production cuts.

The ASX 200 is down 27.1% and the Dow Jones down 21.6%. The property trust sector is now down 51.1% from its high, with GPT down 72.1%, Stockland 50.9%, and Westfield down 35.9%.

A$ hits 98.17c with obvious talk that it is going to parity. The US government taking responsibility for $5.3trillion of residential loans doesn’t endear anyone to the US$.

Woolworths (WOW) is up 3.9% after posting 4Q sales figures. 4Q Easter-adjusted sales up 7.5% on-year. Liquor sales up 6.7%. Normalised sales up 8.7% on the previous year – in-line with their 8-10% guidance. Like-for-like food and liquor up 4.9% on-year having slowed from 6.7% in 1Q to 3.8% in 4Q. Wesfarmers follows WOW and is up 3.7% today.

News Corp’s (NWS) Fox Television completed the sale of eight of the company’s owned-and-operated FOX network affiliated stations, for about $1.1bn in cash. NWS up 30c to 1492c.

APA Group (APA) finalized a new debt facility for $165m at a margin under 100bps. APA up 2c to 278c.

The ASX Accumulation index compounds dividend returns through time. Since 1987 the ASX 200 is up 272%. If you had reinvested all your dividends it would be up 756%.

We have an article in the MARCUS TODAY NEWSLETTER today highlighting the importance of sentiment over fundamentals. One day we will simply flip flop from uncertainty to an appetite for value. At the moment we simply can’t see it, and even if we can see it, we don’t believe it.

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