The market is down 34. The SFE Futures suggested a 1 point fall in the market this morning.

The Dow Jones was up 30.8 – It moved in a relatively large 110 point range and closed higher for the 14th time in 15 sessions on the back of strong earnings results. Blue chips like JP Morgan Chase & Co., Boeing and Caterpillar Inc. helped the Dow close above 12,800 for the first time, despite only 11 of the 30 companies in the index closing higher. In takeover activity, Clear Channel accepted a revised $19.35bn bid from private equity and The Wall Street Journal announced Marcus Brauchli will replace Paul Steiger as the new managing director. The NASDAQ had another down session despite EBay reporting a 52% rise in 1Q profit

Resource down today…BHP down 34c to 2386c and RIO down 110c to 8340c. Metals all down overnight, Copper down 0.8%, Aluminium down 0.5% and Nickel 1%. Zinc down 1.1%. Zinifex down 2c to 1556c. Oil price unchanged. The Government reported a bigger-than-expected fall in gasoline inventories. US Energy Information Administration said stockpiles fell 2.7m barrels to 197m. Woodside down 3x to 3306c. Gold up 80c. Newcrest down 35c to 2273c.

Market taking a breather today … not a big concern considering yesterday’s impressive gains. The main issue dominating the market is private equity, what price Orica will go out on and why James Hardie was up 11% yesterday.

  • Coca-Cola (CCL) had its annual strategic presentation yesterday. The main point to come out of it was CCL wanting to become the third largest player in the $13bn beer market within the next five years adding fuel to the speculation that it will make a bid for Fosters Group (FGL). Haven’t heard anyone mention the privately owned Coopers yet. Lion Nathan unsuccessfully had a crack at it last year but it could well be a consideration for CCL. CCL down 3c to 918c.
  • James Hardie (JHX) down 5c to 926c. Its share price was up 11% yesterday on takeover speculation. In this market private equity bids always seem to smoke before they fire (Orica was up 10% in the three weeks prior to yesterday’s approach).
  • Rural Press (RUP) ordinary shareholders vote on the Fairfax (FXJ) merger today and all indications are that it will be approved after preferred shareholders gave the thumps up earlier this month. If it goes through then RUP and RUPDP will cease trading on Tuesday of next week and anyone bidding for Fairfax will have to buy RUP as well. RUP unchanged at 1398c, FXJ down 5c to 513c.
  • Not surprisingly there are a few brokers downgrading their Orica (ORI) recommendations from BUY to HOLD this morning after yesterday’s bid approach propelled the stock beyond “fundamental value” into “takeover gamble”. The company rejected a $10bn bid approach from private equity at $32. The price jumped from 2789c to 3350c…up 20.1% yesterday and is up a further 41c today to 3391c. The consensus view this morning is that $35 is the likely takeout price. The price is on its way there.
  • Sally Malay (SMY) went ballistic this morning … it hit 540c early on. Now 522c up 28c. No news. The stock is tight (only 186m shares on issue) that it doesn’t take much to move the price. It is just about to cross the $1bn market capitalisation mark (now $972m) and when it does it will pretty much confirm a spot in the ASX 200 next Quarter bringing it onto the radar for big institutions and more importantly the big brokers, it is very under-researched. That process alone could lead to a continued re-rating.
  • Oxiana (OXR) down 6c to 303c after releasing their quarterly production numbers this morning. Sepon copper output down 12.8% on the December Q thanks to schedules maintenance. 1Q gold output down 17.8% … actually a bit better than expected. Bit disappointing, but they say the full year will make up for it and they retain their full year production forecasts.
  • Australian Wealth Management (AUW) down 14c or 5.22% to 254c after Ron Brierley’s Guinness Peat Group sold its 19.4$ stake in the company. AUW was spiced up after the bid for fellow insurance broker OAMPS by Wesfarmers. The price will lose some takeover appeal if GPG are selling, they are often takeover catalysts.

We have a write-up on the forthcoming Platinum Funds Management IPO in the newsletter today … and highlight some of their rather whacky investment cartoons — worth the read just for those.

THE MORNING MARKET REPORT is provided by the MARCUS TODAY daily stockmarket newsletter. You can subscribe for a free five day trial here.

Peter Fray

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