Crikey

The market is in record territory – up 37. The SFE Futures suggested a 51 point rise in the market this morning.

The Dow Jones was up 120 overnight – It moved in a relatively narrow 132 point range and closed in record territory for the second time this month. The market was doing nothing in low volume until 2pm and ended up closing on its highs on the back of the Minutes of the last FOMC Meeting which suggest that either the Fed will keep cutting rates (if the economy weakens) or the economy will strengthen – either way they underwrote a stronger rather than weaker economy dispelling fears of an economic slump. The market took off on the announcement. Twenty seven of the Dow’s 30 members gained, Alcoa topped the lot (up 3.7%) before reporting a 3.4% increase in 3Q profit after market hours. In takeover activity, AT&T Inc. agreed to pay $2.5bn for Aloha Partners, cable television company Oxygen Media agreed to a $925m bid from NBC Universal, and in what was Turkey’s biggest ever private equity acquisition, KKR agreed to buy Turkish logistics company UN Ro-Ro-Isletmeleri for $1.3bn. In other news, Molson Coors (up 11%) and SABMiller announced they would combine their US and Puerto Rican operations in an effort to compete better with industry leader Anheuser-Busch, and the energy sector had a good session after the oil price finished 1.6% stronger. The NASDAQ closed up 0.6%, Google continued its good run after Banc of America Securities upped their target price by 8% and Lehman Brothers Holdings saying they expect a Google phone to be released by February next year. NASDAQ at its highest since January 2001 and is up 17% from the bottom of the recent correction. The NASDAQ would have to go up another 80% before it recovers its tech boom peak.

Resources doing well…BHP up 68c to 4516c and RIO up 130c from 11040c. BHP say that oil has begun flowing at their billion dollar Atlantis project in the US. Metals all up overnight, Copper up 1.2%, Nickel up 1.8%, Zinc and Aluminium both up 1.5%. Zinifex down 2c to 1860c. Oil price up $1.26 to $80.23 after the US government forecasted an increase 4Q global oil demand. Woodside up 30c to 5228c. Gold up $4.40. Newcrest down 4c to 2836c.

Iron ore mania – the big news today is more consolidation in the Iron Ore sector – Murchison Metals (MMX) bidding $982m for Midwest Corporation (MIS) after merger talks broker down - this follows the earlier bid in the sector - Gindalbie Metals (GBG) for Sundance Resources (SDL). This will add spice to the sector and it confirms the confidence in the outlook for iron ore prices that MMX is prepared to pay a 34% premium to an already pumped market price for MIS. Good for the whole sector. Initial suggestions are that the two companies have unique synergies making a counterbid unlikely. The bid is unconditional and the presentation is entitled “Creating a Major Iron ore producer”. GBG and SDL are up 4% this morning. Should reflect well on other small iron ore plays like MGX. Terms: 1 MMX for 1.16 MIS (the Base Price) or 1 MMX for 1.08 MIS (the Higher Price – depends on conditions). Pre bid Prices: MIS – 351c MMX – 508c. Post bid prices: MIS 454c MMX 517c. Market Caps: MIS $736m before bid – higher price bid worth $982m. MMX worth $1.86bn.

In other news…

• Computershare (CPU) announced it will acquire Restricted Stock Systems Inc. in New Jersey for US14.5m to increase their compliance-related services. Yet another acquisition for CPU who have now made habit of efficiently integrating other businesses. CPU up 4% in the past week and down 2c today to 964c. This acquisition is a bit immaterial.
• Sunland Group (SDG) announced they have spent around $80m on their 6^th United Arab Emirates site. It was bought from government owned developer Nakheel and will be used to build a $1.6bn mixed-used residential project with twin residential towers and serviced apartments scheduled to be completed in 2013. SDG up 13c to 429c.
• According to the Sydney Morning Herald, Qantas (QAN) is planning on investing millions on their New Zealand domestic operations, including a $3m upgrade of their airport lounge in Auckland and increasing their fleet size to five aircrafts. QAN up 7c to 591c.
• Publishing & Broadcasting (PBL) up 33c to 2073c. UBS have examined 11 high profile ASX demergers between 1999 and 2007 and say stocks typically underperform ahead of a demerger and that “the propositional fall in the new entity is typically larger than the proportional increase in the head stock post demerger”. As announced earlier in the year, PBL plan to split into two companies, a media vehicle to be called Consolidated Media Holdings (CMH) and a gaming company called Crown.
• Multiplex Group (MXG) said they have sold half their stake in Sydney’s World Square commercial office building to Credit Suisse Real Estate Fund International to repay debt. All irrelevant really, MXG getting taking over by Brookfield. MXG unchanged at 502c.
• David Jones ex dividend 13c today. Those 2000 shares bought for the card at 110c are looking very nice at 507c.

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