The market is up 68. The SFE Futures suggested a 21 point rise in the market this morning.
The Dow Jones was up 73.2 – It moved in a 97 point range and closed in record territory for the 38th time since October last year on the back of mixed economic data and a heap of takeover activity. The big news was Rupert Murdoch’s News Corp offering to buy Dow Jones & Co (up 53%) for $5bn, sending its shares up a massive 58%. The announcement gave other media companies a boost in anticipation of further industry consolidation, New York Times up 5%, Journal Register 7% and Reuters Group up 4.2%. Auto makers closed lower after DaimlerChrysler reported weaker-than-expected sales and the housing sector took a tumble after The National Association of Realtors announced pending sales of existing homes fell 4.9% in March to their lowest level in four years. The Chinese market was closed along with other European markets for the Golden Week Holiday and the May Day Holiday.
Resources all up today. BHP up 45c to 2960c and RIO up 145c to 8260c. Metals mostly up overnight. Copper up 2.9%, Nickel up 1.6% and Zinc 2.7%. Zinifex up 31c to 1676c. Aluminium down 0.5%. Oil price down $1.35 to $64.43 ahead of the US government’s weekly inventory report tomorrow. Analysts are expecting the report to show higher inventories as some refineries shut units for repairs. Woodside up 28c to 3978c. Gold down $6.20. Newcrest up 7c to 2252c.
The RBA has left rates on HOLD. No surprises there. The market will now wait for Friday’s Statement on Monetary Policy to gain an insight into the RBA’s current thinking. Economists are now expecting rates to remain on hold for a while with the budget and an election ahead. Some suggestions they will remain on hold at least until November/December. The market is having a huge day with the All Ords breaking 3200.
- The AFR reported this morning that Wesfarmers is trying to kill off a competitive auction for the Coles Group by approaching institutions with a new 1725c offer (up from 1647c) plus a sweetener if the bid was successful. In so doing they have put a new higher floor under the share price. By all accounts the institutions weren’t interested. There is talk of KKR and Woolworths bidding and Tesco doing due diligence. SO maybe there are some more cards to be played. Hard to buy. You wouldn’t sell. The best opportunity perhaps is to buy WES if they appear to pay too much in the short term. It will pay off in the long term. WES up 24c to 3320c, CGJ up 48c to 1775c.
- After market yesterday Coates Hire (COA) confirmed the press rumours that they had been approached by private equity and in response they are now initiating a strategic review. The stock was up 3% yesterday and is up 26c or 4.73% to 576c today. A “Strategic Review” is the stockmarket equivalent of putting out the “For Sale” sign and seeing what turns up. It will take some months so after the adjustment period there will be a waiting game. The suggestion is that any bid would come in the 600c to 650c range. Problem is, it may be months away.
- Media sector companies are making impressive gains today on the back of Murdoch’s News Corp offering to buy Dow Jones for $5bn in the US overnight. Talk is that he could have a stab at Fairfax (FXJ) considering he is holding a 7.5% stake. FXJ up 3c to 521c.
- Commander Communications (CDR) getting smashed today, its shares are down 40c or 19.8% to 162c after cutting its FY07 EBITDA guidance to $80m-$90m from $95-$101m due to the accelerated transition to Commander Centre franchise model which is due to be completed by the end of June this year.
- Peter Morgan must be seeing what many others are not — value in Ten Network (TEN). His 452 Capital Pty just upped their substantial shareholding in TEN from 6.36% to 7.40%.
- Oxiana (OXR) up 7c to 307c. They put out their AGM Statement this morning. It is very upbeat and talks about the “Building a Major Mining Company”. All good stuff. They recently had a good set of 1st Q production numbers. Day to day the stock is a reflection of the copper and zinc price. If copper and zinc price simply hold the company will smash consensus forecasts. It is on a PE of 7.4x on consensus numbers already.
Oxiana is one of just 16 stocks in the ASX 100 (not including property trusts) with a PE under 15x. Others include BHP, RIO, Zinifex (10% yield) plus industrials like Suncorp-Metway, QBE, ANZ, Westpac and Telstra. So there is some value around even if the market isn’t cheap at the moment (Industrials PE of 18.1x). Some of the stocks in this list have decent yields as well. They are all listed in the Marcus Today Newsletter today.
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