The market is down 8. The SFE Futures suggested a 25 point rise in the market this morning.
The Dow Jones was up 68 – It moved in a relatively large 129 point range and closed up despite the oil price closing 3% higher and retailers warning April might be a slow month for sales. The International Council of Shopping Centers announced same-store sales increased by 5.9%, better than the 4-5% expected, but Wal-Mart and several other retailers said April will be a challenging month. Railroad stocks are still going strong on the back of Warren Buffett’s Berkshire Hathaway announcement last week that it had become the largest shareholder in Burlington Northern Santa, its shares closed up 4.8% and Union Pacific Corp closed 4.3% higher. The NASDAQ had a good session, but Apple Inc didn’t, its shares fell 3% after it announced it was delaying the release of its new computer operating system.
Resources are mixed today. BHP down 15c to 3008c and RIO down 52c to 8325c. Metals down overnight, Copper down 1.8%, Aluminium down 1.3% and Zinc 0.3%. Zinifex down 1c to 1576c. Nickel down 1.1%. Oil price up $1.89 to $63.87 on the back of the US Energy Information Administration reporting total US gasoline stockpiles fell by 5.5m barrels last week to 199.7m. Woodside up 58c to 3973c. Gold down $1.70. Newcrest down 12c to 2383c.
Very quiet today…not much happening. Lots of economic talk about yesterday’s employment numbers on the newswires…meaning there is nothing better to focus on. The market started well this morning but has been on the slide since the open.
- The APA consortium bidding for Qantas has made a few changes to its bid. The Acceptance condition has been dropped from 90% to 70%. So when APA have 70% acceptances the bid becomes unconditional. The closing date has also been extended to 4 May. If they get less than 90% they will not get access to the company cash flows so to service their debt they will have to use their majority shareholding to vote through huge capital returns and dividends… paid for by Qantas raising debt. They will be unfranked as well. Qantas will also probably drop out of the indices. This will not make for an attractive investment for some of the institutions, even the ones that think the company is worth more, the fact that the stock won’t be in their benchmark indices is a good reason for them just to capitulate and sell now. You don’t need to make your mind up until 4 May and the advice is to hold on until then and see what develops…choosing whether to accept at the last minute…it is very likely they will get 70% so the 545c cash bid looks to be your maximum downside.
- Goldman Sachs JB Were has upgraded their Kingsgate Consolidated (KCN) valuation by 103% today and its recommendation from UNDERPERFORM to OUTPERFORM/BUY. The stock is up 44% since the beginning of March this year. They say the stocks are worth more than $7 if they get their Mining Lease Extension. KCN now 573c up 6.5% or 35c.
- Repco Corp. (RCL) will be suspended from trading today after its shareholders voted on April 3 to accept the CCMP Capital offer of 175c a share. A Macquarie Bank led consortium bought RCL for $252m in 2001 and later listed it in 2003. This time round the selling price is $336m, only $84m more than six years ago.
- Emperor Mines (EMP) up 3c or 25% to 15c. It resumed from a trading halt this morning and announced today that it will sell its 20% stake in the Porgera Joint Venture to Barrick Gold Corporation.
- Positive employment numbers gave the market a bit of a boost yesterday with the jobless rates falling to a 32-year low as builders and retailers hired more workers. The jobless rate has dropped to 4.5% from 4.6%. John Howard is wasting no time in saying the WorkChoices legislation changes are the reason. The resources boom may also have something to do with it Johnny.
- The AUS/USD looks to be headed for the 84c mark on the back of the news.
A few things coming up:
- The Rural Press shareholder vote on the Fairfax merger goes through next Thursday. If no-one bids for Fairfax before then, the price is going to lose some of its froth you would think.
- RIO has 4Q production numbers next Thursday. There is takeover talk around, talk of stake buying. They will want the numbers to be good. BHP will have theirs on Tuesday 24 April. All an excuse for brokers to start waving around their BUY recommendations again. One broker had a $35 target price on BHP last month and $105 on RIO. If China is going to grow at 8-9% for the next ten years then why is RIO still 10% below its high a year ago?
- The Banks results season is coming – ANZ on the 24 April – they usually run to results and dividends so now is the time to be buying.
- $400m of Foster’s buyback cheques are sent out next Tuesday. Should make for a good week in the takeover hopeful as the money comes back into the stock.
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