The market is up 51. The SFE Futures suggested a 30 point rise in the market this morning.
The Dow Jones was up 128. It moved in a large 155 point range and closed higher for the fourth consecutive session on the back of a bigger than expected increase in pending home sales and a fall in the oil price of more than 2%. Homebuilders closed up after the National Association of Realtors index showed sales of existing homes increased by a better-than-expected 0.7% in February. Oil experienced its biggest fall in 3 weeks as Tony Blair said the UK will negotiate with Iran to release the 15 captive naval personnel, easing concerns about oil supply disruption. Iran is the second biggest producer in OPEC and has the second biggest proven oil reserves in the world.
It has been a strong start to the month for the Dow which is just 1% off the high hit before the sharp correction that began on February 27th. The NASDAQ closed higher for the fourth day on the trot.
Resources mixed this morning. BHP up 45c to 3054c and RIO up 137c or 1.74% to 8027c. Metals all up overnight by more than 3%, Zinc up 3.4%, Zinifex up 37c or 2.46% to 1543c. Copper up 3.7% and Aluminium 3.2%. Nickel was the big gainer, up 6.2%. Oil price down $1.44 to $64.59 after tensions eased between the UK and Iran over the 15 British sailors and mariners being held captive. Woodside Petroleum up 12c to 426c. Gold down $1.70. Newcrest down 6c to 2374c.
- The RBA left interest rates unchanged at 6.25%. Some people seemed surprised after the hype of the last few days. But with inflation trending down not up and the rise in the A$ already causing some pain there was no urgency for a rise. They certainly had us all worried about it though and sometimes that is as good as a rise.
- The big news this morning is that Wesfarmers have bid for the Coles Group (so glad I sold those 500 shares at 900c). It will be by scheme of arrangement and is worth 1647c ($20bn), the same price WES paid for their 11.3% stake in the market on Monday night and 8% above KKR’s last bid at 1525c. WES to keep 100% of Officeworks and Target (which they say is a “comfortable” fit with Bunnings) and 50% of the rest with the other half of the Food, Liquor and Kmart business to be owned by Macquarie and private equity firms. CGJ up 82c or 5.09% to 1693c. WES up 139c or 3.9% to 3830c. There is still a chance of a counter bid from KKR hence the 50c premium in the CGJ price. The bid if it happened is not yet agreed. If it went through WES would become the biggest stock in the market after the banks and BHP and with its recent underperformance, with the prospect of turning around the Coles businesses and with a 5.3% yield (7.57% including franking) you can see that this could prompt a lot of long term buy recommendations. The cash and shares bid will deliver $15-20bn worth of cash to CGJ shareholders … a lot of that is likely to go into WES and WOW stock. WOW up 36c to 2761c.
- This morning has turned out to be a bit of a flop regarding media stocks. The new media laws came into effect this morning and many believed this would cause an avalanche of takeover activity — nothing to report as yet. Hot takeover tip Southern Cross Broadcasting (up 6% yesterday) is down a touch. The rest of the sector is a bit “dead in the water”. Austar (AUN) up 5c to 168c after it announced it has had preliminary approaches from third parties, obviously more than one. Talks are incomplete and confidential.
- Bank of Queensland (BOQ) up 11c to 1745c after reporting a 21% increase in 1H07 NPAT to $48.8m on the back of strong loan growth. It will pay a dividend of 32c, up from 27c last year. As expected (considering the bid for Bendigo Bank) it was good set of results. It’s shares are up 11.4% this year.
- Macquarie Bank (MBL) and Publishing and Broadcasting (PBL) announced the formation of a new joint venture, New World Gaming Partners (NWGP) and will offer $1.365bn for Canada’s Gateway Casino Income Fund. The acquisition will be financed by a combination of equity and debt. MBL up 173c or 2.1% to 8422c and PBL up 26c to 2011c.
You have until 7pm tomorrow evening to get your Fosters share buyback tender form into the registrar.
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