The market having another shocker down 96 or 2% – but improving. It was down 149 at worst. Not the worst result considering the SFE futures suggested a 178 point drop this morning. All sectors down. Financials and Property Trusts down 1.7%. Industrials down 2.9% and Resources down 3.6% on the back of metals prices falling over in London overnight and concern that demand will be affected by a US recession. Economists predict a interest rate cut of 50bps by the RBA this afternoon – the decision is due 2:30pm. One economist says there is a chance that rates may be cut by more than 50bps because lending rates has fast become the RBA’s policy priority.

Dow down 369. Down 800 at worst – largest intra-session points drop in history dropping below the 10,000 mark for the first time in four years – extending Worst weekly fall since 2001. Bounced back 440 points in the last hour. Closed below 10,000 for the first time in four years. World Markets down on a lack of confidence in the impact of the US Stabilisation package and a realisation that there is no miracle recovery on the horizon as markets take a long time working through their problems. The Fed will double the Term Auction Facility to US$900 billion to increase liquidity –interest on depository institution balances also to be paid by Fed. US officials called for a “forceful and coordinated” global reaction – Europe’s response was fragmented.

London’s FTSE 100 index fell 8%. Europe fell 7.6%. Germany down 9%, and France 7% – fears in Europe that more banks will fail. France called an emergency G8 meeting to coordinate central banks cutting rates.

  • Both BHP and RIO down significantly in ADR form overnight, 8.73% and 10.2% respectively. BHP down 9.86% in the UK, RIO down 15%.
  • Metals all got smashed – Nickel down 10.3%, Copper down 8.4% and Zinc down 7.16%. Aluminium down 6.8%.
  • Oil price down $5.76 or 6% to $88.15 on concerns that demand for oil could drop if the US goes into a recession.
  • Gold up $33 to $866.20
  • US Bonds up with the 10 year yield down to 3.45%.

Apart from the market falling over…there is few other things going on.

  • PaperlinX (PPX) plummeted 22% early after they raised only $150m through a institutional entitlement stock offer at $1.25 per share – less than the $200m wanted – and at a 29% discount to the close price last Friday – the lower end of the placement range expected. PPX is now only expecting about $77m out of retail entitlement take-up instead of the $100m originally planned. PPX still trying to sell its Australian Paper unit to strengthen its debt position. PPX down 7% to 150c.
  • Lihir Gold (LGL) announced it has produced the first gold at its Bonikro operations in Ivory Coast. LGL down 4c to 247c.
  • Suncorp-Metway (SUN) confirmed yesterday that it has been approached by numerous parties regarding its Banking and Life/Wealth Assets. GSJB Were maintains their HOLD and 1200c target and says it’s not a big surprise and that any prices discussed will almost certainly be “cheeky” because it is an opportunistic time. ABN AMRO upped their target to 1170c from 1065c and maintains their HOLD recommendation. They expect the bidder to want a bargain due to the poor outlook for that business. SUN down 27c to 1080c.
  • Foster’s Group (FGL) had Citi cut their recommendation to HOLD from BUY saying, “FGL has significantly outperformed the domestic market during recent economic uncertainty…With no guarantees over corporate action, either through the strategic wine review or external bids for the company, we see little absolute upside for the shares from current levels.” Despite the downgrade, they upped their recommendation to 590c from 570c. FGL up 2c to 587c.
  • We are yet to hear anything from ABC Learning (ABS) regarding its financial position. We got the management change announcement last week and that was it. They told us we would have something by the end of last month. It only adds to the speculation that it will announce higher than expected writedowns. ABS still in a trading halt – last traded at 54.
  • JB Hi-Fi (JBH) announced sales for July and August have been better than expected. The complete opposite to what Harvey Norman told us last week. It is yet to finalize its September result but its 1Q was on budget. JBH down 2.4% to 1083c despite the announcement.
  • Alumina (AWC) down 9.8% to 275c after its Chinese rival Chalco said their 3Q profit would be down 50% from last year. Metals getting canned overnight in London hasn’t helped the share price as well.
  • JP Morgan maintain their OVERWEIGHT recommendation on Stockland (SGP) despite them announced UK write-downs last week. They say the stock offers a solid FY09 net operating income growth from its domestic trust and is sensibly geared at 29%. SGP down 9c to 521c.
  • Commonwealth Bank of Australia (CBA) said no agreement has been reached with HBOS’s BankWest. CBA down 88c to 4312c.
  • Babcock and Brown Power (BBP) announces Ross Rolfe as new CEO – names Peter Brook as New CFO. BBP down 1.5c to 11.5c.
  • Arrow Energy (AOE) announces total gas resources stand at 74,244 petajoules. Net share of the resources post the sell down to Shell is 37,508 petajoules. AOE down 12c to 249c.
  • Monadelphous Group (MND) has been awarded a $140m contract for the Worsley Alumina project. MND down 24c to 1126c.

MARCUS PADLEY is the Author of the MARCUS TODAY Daily Stockmarket Newsletter.

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