The market is up 68 on the back of an 89 point rise on Wall St and a 53 point rise in the Futures this morning. Our market is following the US lead with financials up 1.7% and resources up 2.2%. Macquarie Group is holding up today (up 1.7%) after yesterday’s 9.6% fall as UBS cut their target price to $48 from $60 and warned about “impairment” charges against associated investments. QAN down 6.5% as it goes ex dividend 17c and falls 24c, IAG is ex 9c and OZL 5c. Ex dividend tomorrow - AGK, COH, DOW and SUN. BHP goes ex dividend on Monday along with Woodside and Woolworths.

The Dow Jones had a good session – up 89. Up 141 at best. Down 31 at worst. The main driver was durable goods up much more than expected boosting confidence about the economy. Oil and energy up strongly. Resources up. Financials outperformed on positive news about Fannie Mae and Freddie Mac. 9 out of 10 sectors up – volumes even lighter than yesterday – once again, the lowest level for the year as the US runs into a long weekend for the Labor Day holiday on Monday. Financials up 1.7% - Fannie Mae and Freddie Mac up 15% and 20% after Standard and Poor’s reaffirmed their debt ratings and Bank of America and American Express both up over 2% as the Commerce Department report increased expectations that the economy was recovering. The NASDAQ closed up 0.87%.

• The SFE Futures suggested a 53 point gain in the market.
• Both BHP and RIO up in ADR form overnight, 1.79% and 1.60%.
• Metals mostly up overnight – Nickel up 4.78%, Zinc up 3.34% and Copper 0.86%. Aluminium down 0.15%.
• Oil price up $1.86 to $118.17 – third straight day of gains – on concerns that tropical Storm Gustav could enter the Gulf of Mexico and disrupt oil and natural gas production.
• Gold up $5.90 to $830.10
• Bonds up with the 10 year yield down to 3.77% from 3.78%

Another busy day on the announcement front, not long to go before life returns back to normal and the reporting season comes to a close.

• AMP – AMP Ltd – Report a net profit (excluding accounting mismatches) of $278m, down 50%; analysts’ were expecting a 47% fall of $296m. Declared an unchanged dividend of 22c – market expected a dividend of 22.5c with forecasts ranging from 21c to 24c. Reaffirmed its current dividend payout policy, which is helping the share price. Up 4.5%.
• ALL – Aristocrat Leisure – IN LINE – Announce a 1H net profit of $71.4m, down 43% and in line with its recently downgraded guidance of around $70m. Credit Suisse expected $72.8m, GSJB Were $70.1m. Up 4.3%.
• ORG – Origin Energy – IN LINE - Announces a FY net profit of $516.7m and an underlying profit of $443m. Analysts’ had expected $441.6m. Will pay a final dividend of 13c. Reiterates 10-15% underlying EPS growth target. Up 0.2%.
• FLX – Felix Resources – GOOD - Said profit quadrupled to $188.26m from $46.96m. GSJB Were expected $178.7m. The result may end up being irrelevant after it announced last month that it had received takeover proposals by several parties. Up 3.7%.
• TTS - Tattersall’s Group – Announce an 11% fall in FY08 net profit to $257.6m, slightly below analysts’ expectations of $259.6m. Announce a special dividend of 10.5c, says businesses are offering good prospects into FY09. Key now is future growth opportunities after the government put the kybosh on their gaming duopoly. Down 0.8%.
• AUB – Austbrokers Holdings – SLIGHTLY AHEAD OF EXPECTATIONS – NPAT up 17% to $15.7m, slightly higher than the $15.3m GSJB Were expected and $15.3m analysts’ expected on average. Up 2.5%.
• SBM - St Barbara – BELOW EXPECTATIONS – Announce a $17.3m loss. Underlying loss weaker than what GSJB Were had expected. No change to production guidance of 295-315koz for FY09. Down 2.4%.
• PNA - Pan Australia – OK - Announce a 1H net loss of US$389,000. Result better than expected. No interim dividend. Up 2.8%.
• QGC – Queensland Gas – Underlying profit comes in at $30.6m. FY net profit of $244.6m. No final dividend. Up 0.47%.
• FKP- FKP Property Group – FY net profit down 25% to $145.3m. Operating profit (excluding property revaluations and other non-cash items) up 11% to $150.2m. Declared a final dividend of 15.7c, down from 16.5c last year. Up 6.75.
• MCC – Macarthur Coal – BELOW GUIDANCE – Announce a FY net profit of $72.7m, up 9.3%, below company’s guidance of between $80m-$90m and GSJB Were’s expectations of $83.5m. Down 7.5%.
• IGO - Independence Group– Announce a net profit of $51.5m and declared a final dividend of 5c. Up 3.3%.

Others news…

• Sedgman (SDM) announces its metal division has been awarded a 5 year operations contract at Xstrata’s Handlebar Hill mine in Mt Isa. Take the value of Sedgman’s order book to over $700m. Up 4.2%.
• Sigma Pharmaceuticals (SIP) announced it has no definitive plans to break up the company. Down 5.85.
• Babcock & Brown Capital (BCM) has provided a review of management arrangement and a share buy-back update. It has begun talks on management internalization and deferred off-market buyback. Down 6.25%.
• We are waiting for ABC Learning (ABS) to restate its results for at least the past 2 years and announce a bigger-than-expected loss from the partial sale of its US business. Still in a trading halt.
• Macquarie Group (MQG) doing OK – up 1.0% - after falling 9.6% yesterday after UBS Warburg downgraded the stock to Neutral. Citigroup says the balance sheet worries are overdone.
• Brokers maintain their BUY and OUTPERFORM recommendations on Woodside Petroleum (WPL) – after its profit result yesterday. Up 2.5%.

The market is up 132. Financials rocketing – up 4.2% after the strong lead from the US. The main theme has changed in the last 24 hours from inflation fears and pressure on interest rates to lower inflation and interest rate cuts. It is a very important change in market thinking and at the risk of crying “Wolf” is a significant foundation for a market rally from here….whereas other rallies have been little more than a thrashing herd changing direction. 

RBA set to cut rates in September with a 68% chance of a 50bp point cut factored into Futures markets. Property flying – up 3.8%. Building stocks strong.  SFE Futures were up 88 this morning. Resources also up 2.0% but getting left behind.

Dow up 331. Up 332 at best. Gradually rose all session and closed on high. Dow up the most in four months. All 10 sectors up. 7 sectors up more than 2%. 91% of S&P500 components up. FOMC leave the Fed funds rate unchanged at 2.00%.Key point: Oil fell to a 3-month low and resources fell - the talk on CNBC this morning is that the Fed expect commodity prices to fall allowing them to ease up on the prospect of interest rate rises. Some signs of growth - July’s ISM non-manufacturing index up more than expected. Crude down another 2.4%helped oil-sensitive stocks. Consumer discretionary sector up 4.4% (steepest advance in 5-years), Retailers up 5.3%, Airlines up 9.4% and Transportation up 4.9%. Commodities CRB Index lost 10% in July – steepest decline in 29-years as oil, copper and wheat prices plummeted. Energy underperformed on falling oil prices – only up 1.1%. Financials up a whopping 5.1% - helped by a rise in European banks after Paris’s Societe Generale posted better-than-expected earnings. AIG led the jump – up 12% on an upgrade to BUY at UBS. Mortgage related stocks jumped – MBIA up 8.79%, AMBAC 12.89%, the 2F’s (Fannie and Freddie) up 14.96% and 6.91%.

• Both BHP and RIO down in ADR form overnight, 2.09% and 2.42% respectively. BHP up 93c to 3675c. RIO up 311c to 11390c.
• Metals mixed overnight – Copper up 0.44% and Aluminium up 0.64%. Zinc down 1.31% and Nickel down 2.31%. Oz Minerals up 6.1% or 10c to 173c.
• Oil price down $2.74 to $118.71 on belief that a slower US economy will reduce demand. WPL up 69c to 5189c.
• Gold down $21.70 to $881.80. NCM down 71c to 2560c.
• Bonds down with the 10 year yield up to 4.02% from 3.97%.

Gold stocks getting belted again today - as a hedge against inflation Gold will struggle with the lower inflation theme.

Stocks that struggle with a higher A$ doing well today on hopes that interest rates and the A%$ have peaked. Talk of the A$ going under 90c.
 

Australian Housing Finance slumps 3.7% in June- more than the 2.0% expected – investor housing finance also down 0.3%. Weak numbers will support the RBA’s bias towards cutting rates.

Most Oil stocks up despite an overnight fall in the oil price.

Asciano (AIO) up 6c to 501c on results and comments that they have had approaches for their assets. The company rejected a private equity bid on Monday at 440c.

News Corp’s (NWS) up 4Q results see a 27% jump in net income. Said their pace of growth will ease and that more challenging economic conditions are ahead. Well received in the Us and here and benefiting from the fall in the A$. NWS up 3.84% or 62c to 1672c.

Corporate Express (CXP) half year results not flash and contains net profit guidance of $61.7m-$66.1m. CXP negotiating with possible acquisition targets. Weres think result disappointing and they are reviewing forecasts. CXP flat at 560c.

ResMed (RMD) announced 4Q net profit grew by 7% and FY08 earnings up 66%. CEO says well positioned to deliver strong growth in FY09. RMD up 13.65% or 55c to 458.

NAB announced the first phase of its Next Generation Platform initiative to replace core banking systems over the next 5-years. Up 90c to 2565c.

Beach Petroleum (BPT) announced substantial coal seam gas reserves upgrade – 282% jump in probable reserves at Surat Basin. BPT up 4c or 3.85% to 108c.

Newcrest Mining (NCM) says partial gas from Varanus island now flowing to Telfer mine – 50% of gas to Telfer under contract with Apache will now be possible. NCM down 2.7% or 71c to 2560c.

Tower Australia (TWR) said St George Bank’s switch to AIG Life as favoured new life insurance partner will impact around $60m on TWR’s $700m in-force book. No impact on FY08 with slight profit impact in FY09. TWR up 4.62% or 7.5c to 170c.

Tabcorp (TAH) tipped by Weres to spend $400m in capex for its Star City casino. TAH expected to write down the value of its Victorian gambling license in FY results tomorrow. Analysts consensus for net profit before one-offs is $515m, up 14% on last year. TAH up 21c to 877c.

PanAust (PNA) confirms high-grade Copper-Gold at Puthep, Thailand – project study at feasibility stage and to be completed 1H09. PNA up 1.5c to 70.5c.

Seven’s (SEV) FY year results yesterday sees brokers holding or cutting target prices this morning – acquisitions seen as the key to unlocking value - buyback to support share price. SEV up 11c to 850c.

PaperlinX (PPX) being tipped by JP Morgan to report FY08 net profit of $50m, 32% down on FY07 on August 21^st. PPX up 12.44% or 25c to 226c.

WA News (WAN) tipped by JP Morgan to post FY profit of $126m later today. WAN up 2.57% or 23c to 919c.

australia stock market is up 98. The SFE Futures predicted an 84 point rise. More than a couple of comments from colleagues about how ridiculous the market is at the moment…volatility is massive….and “what chance do you have” trying to trade it. The reply is to say that extreme volatility is often the pre-cursor to change - after a 28% fall in the market….lets hope so. Financials up 3.4%, Resources also up 1.8%.

The Dow Jones “Lotto” index was up 266 reversing the 240 point fall yesterday. Up 267 at best closing on its highs. Down 3 at worst. It was basically the falling oil price, better-than-expected 2Q reports and increasing consumer confidence that did the trick. Financials closed up 7.5%, with investors thinking there are better times ahead for the sector. Lehmans up 11%, Bank of America increased 15%, JP Morgan up 8.2%. Merrills announced it would sell $30.6bn worth of ABS CDOs for only $0.22 in-the-dollar, or for $6.7bn – a remarkable discount – to strengthen its balance sheet. The sale will mean a $4.4bn pre-tax write-down in the 2Q. Merrills has had $51.8bn in write-downs and credit losses since the credit crisis started. In other news, US Steel Corp up 14% in the biggest one-day jump since 2002 posting 2Q profit that doubled on higher prices and July consumer confidence better-than-expected – rose 2% month-on-month – up to 51.9 and the first gain in 6-months – boded well for stock market. Earnings have topped estimates for ¾ of the 255 companies that have reported 2Q results so far – but profits down 23% on average and the earnings for banks are down 90% while the earnings in the discretionary sector are down 33%. The NASDAQ also had a strong session – up 2.45%.

• Both BHP and RIO up in ADR form overnight, 2.4% and 1.7% respectively.
• Metals all down overnight – Nickel down 3.79%, Zinc down 2.4% and Aluminium 1.92%. Copper down 1.08%.
• Oil price down $2.51 to $122.21 – hit a 7 week low – despite concerns of a militant attack on two Nigerian crude pipelines.
• Gold down $11.20 to $916.50
• Bonds up with the 10 year yield down to 4.03%.

ABN AMRO is the latest bank to cut their recommendation on the Australian bank sector (to Underweight from Neutral). They tell us the sector is likely to underperform until there is clarity on where bad debt levels will peak. They cut ANZ to HOLD from Buy and St. George (SGB) to SELL from Hold. The NAB is ABN AMRO’s only BUY recommendation. They expect flat dividends and underwritten dividend reinvestment plans across the sector, and there is now a risk of capital raisings. GSJB Were went underweight banks yesterday with a SELL recommendation on the ANZ. ANZ up 50c to 1603c, SGB up 3.5% to 2659c.

BHP Billiton have released its Letter to Rio Tinto shareholders. BHP warn RIO would be trading lower without their takeover proposal and Chairman Don Argus says BHP’s offer of 3.4 BHP for 1 Rio share represents a “substantial premium” of 45%. BHP expects the various regulatory approvals for the deal to be completed by the end of 2008, after which BHP should be in a position to send offer documents to RIO shareholders. BHP up 82c to 3909c.

We have had a busy morning on the announcement front…

• Aristocrat Leisure (ALL) down 17% (down 21% at once stage) after announcing late yesterday that its FY profit to will be down as much as 23% due to currency issues. (Weak US$, Strong AUS$ - highlights the issue for other stocks). Now expects earnings for the current year to be between $190m-$200m compared to previous guidance of $247m.
• Austar United Communications (AUN) down 4% – Good results but hasn’t done much for the share price – EBIT up 20% against guidance of up 20% - has announced a 1H loss of $7.6m compared to a $24.7m profit last year. AUN interest bill for the half rose to $30.8m from $20.7m.  AUN down 4.5c to 121c.
• Lihir Gold (LGL) said 2Q gold production came in at 177,000 ounces, up 27% on the previous Q. Maintained its guidance for FY production of more than 850,000 ounces of gold. Also mentioned that commercial production from Ballarat is due to commence in the 4Q.  LGL up 3c to 292c.
• AED Oil (AED) up 12% - it has produced 340,000 barrels of oil in the June Q. Output was impacted by a short sut-in for routine review. Output to date is at around 1.6m barrels. AED up 25c or 11.2% to 247c.
• The National Australia Bank (NAB) board is due to meet in Melbourne today. The Australian reported this morning that CEO John Stewart might be given his marching orders on the back of plans of a further $830m provision for its exposure to the US. NAB up 55c to 2533c.
• Rio Tinto (RIO) have announced they will spend $2.15bn to expand their Corumba iron ore mine in Brazil. IT wants to increase production to 12.8m metric tonnes by 2010. Ausenco (AAX) has been awarded the US$140m contract for the mine. RIO up 255c to 12170c.
• Broker downgrades this morning for Alesco (ALS) after saying yesterday its outlook will remain challenging despite announcing a solid profit yesterday. UBS cut to NEUTRAL from BUY, ABN AMRO to HOLD from BUY. ALS up 3c to 678c.
• Mirabela Nickel (MBN) up 5% - it has announced a 40% increase in production capacity at its Santa Rita nickel project in Brazil to 27,000 tons. It is due to start commissioning in mid-2009.  MBN up 23c to 424c.
• Bradken (BKN) has priced a $110m institutional placement to fund the acquisition of AmeriCast Technologies Inc. Placement will result in the issue of around 13.7m additional shares at an issue price of 805c. BKN up 13c to 897c.
• Macquarie Group (MQG) has upped their shareholding in Auckland Airport to 5%. MQG up 6.6% to 5168c.
• GSJB Were has increased their forecasts for headline inflation. Now expects headline inflation to average 4.4% & 3.6% in 2008 & 2009 respectively.
• Australian building approvals fell 0.7% in June from May - below expectations of a +1.7% rise, but well above 7.2% fall in May.