Australia Market Wrap
Market not helped by Macquarie Group Profit
Despite Macquarie Group earning a $604 million profit and beating earnings estimates that included strong capital and cash position, local shares fell heavily again on a dearth of buying and no catalyst for investors to take new positions. Regional markets were also weaker and a negative lead from Wall Street and commodity prices did not help sentiment.
The benchmark S&P/ASX200 Index ended the day down 129.8 points, or 3.6%, at 3523.2.
A surge of margin calls on bank stocks forced the market down in late trading to an intraday low of 3506. The margin calls were affecting investors whose positions had withstood all the market drops until now.
Banks – Macquarie Group makes a profit, despite soothsayers
ANZ Bank (ASX:ANZ) closed 20 cents lower, or 1.5%, to $13.04, Commonwealth Bank (ASX:CBA) lost $1.23, or 3.9%, to $30.10, National Bank (ASX:NAB) was 22 cents higher, or 1.2%, at $19.15, Westpac (ASX:WBC) was down 77 cents, or 4.7%, to $15.55. Macquarie Group closed up $3.40, or 16.5%, to $24.00.
Investment bank Babcock & Brown (ASX:BNB) fell further trading down 10 cents, or 24%, at 31 cents.
Macquarie Group Profit Result
Net profit at the listed investment group Macquarie Bank for the six months to end-September fell 43% to $604 million, from $1.06 billion in the year earlier after taking substantial writedowns due to sharply deteriorating markets.
Its shares soared in early trading as the bank revealed strong capital and cash positions that should buffer it against the current global financial market turmoil. The share price had risen by $5.70 to $26.03 before a sell off.
Macquarie warned today that it will also fall far short of its record annual $1.8 billion net profit outcome in 2007-08 with its 2009 earnings figure likely to come in at just over $1.2 billion.
The group is expecting to produce second-half profits broadly in line with today's interim result although it underlined just how difficult the position it and other financial services companies are facing as a consequence of the maelstrom that has gripped equity and debt markets.
''Unprecedented market conditions make short-term forecasting extremely difficult,'' Macquarie told investors in its results statement released to the ASX this morning.
Macquarie held interim dividend at $1.45 a share. Macquarie actually has more capital than it currently needs, its capital base is $3.3 billion or 40% above the minimum regulatory requirement, and its tier 1 capital ratio of 11% is stronger than its Australian and overseas banking peers.
Capital strength will improve further this half as Macquarie trims the size of its asset book, and the group is also holding more cash than it needs to fund short-term funding needs.
Miners head lower
All sectors of the market were lower today, with the materials sub-index faring the worst, falling 5.5%, followed by industrials at 4% and health at 3.8%.
BHP Billiton (ASX:BHP) was down 90 cents, or 3.6%, to $24.20, Rio Tinto (ASX:RIO) was off $5.44, or 7.4%, to $68.00, Oz Minerals (ASX:OZL) was down a whopping 10 cents, or 12.3%, to 73 cents and Fortescue Metals (ASX:FMG) was down 24.5 cents, or 13.2%, to $1.51.
Among gold stocks, Lihir (ASX:LGL) was down 4.5 cents, or 2.5%, to $1.75 and Newcrest Mining (ASX:NCM) was down $1.91, or 9.1%, to $18.99.
Energy stocks turned down in the afternoon after the price of crude oil fell overnight. Santos (ASX:STO) ended down 40 cents, or 3%, at $12.75 and Woodside Petroleum (ASX:WPL) was down 81 cents, or 2.3%, to $34.99.
The Australian dollar was also in free fall territory, down to 64.70 US cents, auguring well for miners and exporters.
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05/01/09 Aussie shares pulled back by banks
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19/12/08 Bargain hunters scoop up Aussie banks
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18/12/08 Australian shares recover – but still catching the CBA disease
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17/12/08 Aussie shares gain, but feel CBA’s pain
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16/12/08 Local stocks fall, but off lows
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15/12/08 Aussie miners lift market on US auto bailout optimism
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12/12/08 Local shares follow fortunes of US auto bail-out
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11/12/08 Australian bourse’s no leads day
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