The market is down 44. The SFE Futures suggested a 59 point fall in the market this morning.
The Dow Jones was down 84.5 – It moved in a big 201 point range and closed lower for the fourth consecutive session on the back of mixed economic data and some profit taking by nervous investors. Hopes of an interest rate cut by the Federal Reserve in the near future were erased after the Commerce Department reported sales of single-family homes in the US unexpectedly increased by 16.2% last month, the most in 14 years. Economists were expecting a 0.2% increase. In takeover activity, Advanced Medical Optics confirmed their interest in Bausch & Lomb, it was only last week that Bausch & Lomb agreed to a $3.67bn bid from private equity group Warburg Pincus. Energy stocks took a breather on the back of a 2.3% fall in the oil price and the NASDAQ struggled, it closed 1.5% lower.
Just about everything is in the red today, resources in particular. BHP down 56c to 3044c and RIO down 190c from 9210c. Metals all down over 2% overnight, Nickel down 2.6%, Zinc down 2.2% and Aluminium 2.4%. Zinifex down 52c to 1676c. Copper down 2.9%. Oil price down $1.48 to $63.62 on the back of refinery shutdowns that could cause an increase in inventory of oil at Cushing, Oklahoma, the delivery point used for benchmark futures. Woodside down 52c to 4413c. Gold down $9.30. Newcrest down 9c to 2190c.
The market is down again, lots of red around. It’s going to go a bit quiet, the US has a half day tonight and the Memorial Day holiday on Monday (markets closed). The Diary in Australia is almost empty for the next few weeks. Apart from some James Hardie results on Monday there isn’t much else to hang your hat on.
- There is talk in the press today about private equity running the ruler over BHP Billiton (BHP), Texas Pacific Group executive director Simon Harle said “We crunched the numbers ourselves to see if was conceivable… For what it is worth, we didn’t think it was”.
- Tap Oil (TAP) up 1.5c to 161.5c and Merrill Lynch came out this morning saying the “TAP has made some significant changes to transform the company, which in our view have the potential to lead to tangible results”. The company has no debt and over $100m cash on its balance sheet, that is 40% of its market cap.
- Paladin (PDN) upped their stake in Summit (SMM) 76.4% from 70.9% with the takeover offer due to close today.
- Macquarie Bank (MBL) have upped their target price on Qantas to 705c. Another bulge bracket broker joining the throng. They reckon the company could afford to return 97c a share to shareholders in capital management. QAN one of the few stocks to rise yesterday and is up again this morning. Up 12c to 558c. UBS and Goldman Sachs JB Were both upped their recommendations to a BUY this week with target prices of 700c and 570c and talk of a $1-2bn capital management initiative.
- Platinum Asset Management (PTM) down another 33c today or 4% to 808c. Still up 60% since listing.
- Babcock & Brown (BNB) have upgraded earnings guidance. Despite that the price is down 2.5% or 88c to 3112c. They have upped earnings growth for this year from 20% to 30% (versus 58% last year). BNB manages total assets of $44bn. Macquarie $200bn. MBL down 2.93% or 271c to 8929c.
- Earlier this week UBS upped their target price on AED oil from 646c to 822c. Market cap $450m. Price at the time was 615c. This morning Macquarie have initiated research coverage with an OUTPERFORM and a 790c target price. Share price up 1c to 718c. You wonder why two big brokers have written it up in the same week. There’s been no new news. You might suspect some corporate deal although you might also like to know that AED have just appointed Richard Price as a non executive director – Richard is an executive director within Macquarie Bank’s Investment Banking Group.
It’s a bit quiet today so we have an article in the MARCUS TODAY newsletter about what broking was like 25 years ago. No PCs. Share prices on a big central telly. A lists of PEs was innovation. The partners smoked cigars and you could safely drink four pints of Pimms at lunchtime and appear “normal” to your colleagues that afternoon.
THE MORNING MARKET REPORT is provided by the MARCUS TODAY daily stockmarket newsletter. You can subscribe for a free five day trial here.