Crikey

The market is down 9. The SFE Futures were predicting a 26 point rise this morning. Industrials down 1.7%. Resources up 0.3%  — BHP up 0.4% and RIO down 0.4%. Financials up 0.4%. Most gold stocks up on the higher gold price overnight. Banks mixed.

The Dow was up 86. Up 203 at best. Up all session. S&P 500 down 11.7% over the financial quarter despite being up 8.5% in March. US Bank and technology stocks led the way. Good news from financials in Europe  — Barclays announced it doesn’t need the government asset protection plan. US Financials up 6.7%. Brokerage Davenport moved Microsoft to a BUY. General Motors’ new CEO said bankruptcy is “more probable” under the new tougher requirements for government aid. US Consumer confidence, manufacturing and house price index all fell short of expectations. Material stocks up  — rumours of BHP bid for Alcoa. BHP and RIO both up in ADR form overnight  — 3.58% and 0.80% respectively. Metals mostly up. Oil price up 2.4% to $49.67. Gold up. Bonds down. A$/US$ up.

OZ Minerals have been granted another debt extension by their bankers this morning after China’s Minmetals re-jigged their US$2.6bn bid for the zinc-copper miner to a US$1.21bn offer for most assets excluding the Prominent Hill mining operations, Martabe, some investment assets and investments in listed entities. OZL said the deal will allow them to retire all of their debt apart from some convertible bonds and will have $600m in spare cash. The new deal again requires FIRB approval. Patersons values OZL at around 50c post the deal on first look. It is now a copper stock.

Fortescue (FMG) has been given the green light by the government (Wayne Swan) for Hunan Valin to buy 17.55% of the company … they are buying 17.4% from a $648m new issue of shares at 248c and by buying a stake off Harbinger. Boosts their funding position. Could be good news for RIO too whilst awaiting its the FIRB’s approval on the Chinalco deal.

• Tabcorp Holdings (TAH) has allocated $200m in bonds with an initial interest rate of 7.39% through a bookbuild  — that’s a 4.25% margin above the three month bank bill rate. The issue is rated by S&P as BBB+ investment grade.
• PaperlinX (PPX) secured an extension of the waiver on its noncompliance with set financial ratios until May 31 from its lenders and note-holders  — the cost in fees will be substantial including advisory fees, up front fees of $90m and interest costs.
• Lend Lease (LLC) note Bovis Lend Lease signs a deal with BP to manage their retail network in Europe.
• One Steel (OST) to cut EAF steel production  — Laverton output fallen from 850,000 tons to 725,000 tons. They said they were bringing inventories in line with demand. They said sales will be lower than expected in the 2H.
• Carbon Energy (CNX) executes heads of agreement for coal and gas sale.
• Kagara Ltd (KZL) said Mungana will produce at cost of $300 per ounce of gold.
• Flinders Mines (FMS) out of a trading halt with a Maiden 476m tonne JORC inferred resource at their Hamersley Project.

Other…

• Macquarie Group move Fortescue Metals to Underperform with a 193c target price after Treasurer Wayne Swan granted approval for Chinese steel maker Hunan Valin’s investment in the company. Citi has a 255c target price and says the decision isn’t a surprise but a positive for FMG to top up its balance sheet.
• Royal Bank of Scotland cut Macquarie Communications Infrastructure to Hold from Buy and upped target price to 250c from 200c saying the offer of the 250c /security from Canada Pension Plan Investment Board (CPPIB) represents an FY09 EV/EBITDA multiple of 10.8x (post fees) and believe it is an opportunistic bid at what would be at good price for CPPIB (based on underlying value).
• Wayne Swan, drawing on latest OECD forecasts, said it’s “inevitable” the Australian economy will contract in the period ahead.
• Retail sales come in miles under expectations  — down 2% in February. This follows a revised incrase of 0.5% in January.
• Building approvals have experienced a strong rebound  — the seasonally adjusted estimate for total dwelling units approved rose 7.8%, the first rise since June 2008. It follows stronger than expected Housing finance approvals.

The Dow Futures suggest a 80 point fall on Wall Street.

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

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