The market is down 37. The SFE Futures suggested a 5 point fall in the market this morning.
The Dow Jones closed up 14 – It moved in a 99 point range and closed slightly higher on the back of encouraging consumer confidence figures and a heap of takeover activity. There were $112.5bn worth of mergers and acquisitions mentioned overnight. A consortium of banks led by Royal Bank of Scotland said it would bid $95.5bn for ABN AMRO (topping the Barclays bid by 13.7%), Washington Group International closed 21.5% higher after agreeing to a $2.6bn offer from rival URS Corp, and Tishman Speyer Properties together with Lehman Brothers Holdings said they would buy Archstone-Smith Trust for around $13.5bn. In economic news, the Conference Board said the Consumer Confidence Index increased to 108 in May, up from 106.3 in April and slightly better than the 105 reading analysts expected. US-listed shares of Chinese companies closed lower after China tripled the stamp duty tax on security trading in an attempt to lower demand for equities, and the NASDAQ had a positive session closing 0.6% higher.
Resources mostly down today…BHP down 21c to 3149c and RIO down 17c to 9619c. Metals mostly up overnight, Copper up 0.9%, Nickel up 2.8% and Zinc 0.3%. Aluminium down 0.7%. Zinifex down 19c to 1728c. Oil price down $1.40 to $63.19 on the back of hopes that the possibility of a new president in OPEC member Nigeria would help stabilise the supply from that region. Woodside down 34c to 4416c. Gold up $1.90. Newcrest up 25c to 2199c.
- The comment from Wesfarmers (WES) after the withdrawal of KKR from the consortium bidding for Coles, “We remain very committed to acquiring Coles. We’ve spent A$2 billion, we’ve got 13% and we’re very focused on getting a proposal to Coles shareholders as quickly as possible”. There is talk on the wires this morning that Woolworths are talking to the remaining consortium members TPG, Carlyle Group LP, Blackstone Group and Bain Capital although they are also supposed to be talking to Wesfarmers. It seems unlikely WOW would go it alone, they would have ACCC issues and would want to offload Officeworks and Target. WES down 4c to 3800 and CGJ up 12c to 1677c. WOW down 37c to 2770c.
- Talk in the AFR this morning that Macquarie Bank (MBL) recently approached the Future Fund to buy (some of?) their stake in Telstra (TLS). Apparently MBL is looking at putting together an institutional consortium to bid for at lest 3% of TLS held by the fund. The Future Fund yesterday directed interested parties to contact their advisor Deutsche Bank, pretty much confirming they have had interest.
- Macquarie Airports (MAP) down 6 cents to 409c after announcing they announced no decision had been made yet regarding their 45% ownership of Aeroporti di Roma. Talk is they might be considering a partnership with a local bank to launch a friendly bid for Rome Airport Gemina.
- Westfield (WDC) up another 37c today to 2120c after Citigroup followed Goldman Sachs JB Were with another BUY recommendation on WDC this morning. They say recent weakness presents a buying opportunity, that the stock is good value with upside from project delivery.
- Coal seam gas stock Arrow Energy (AOE) up 22c or 9% to 262c after another positive announcement.
- Santos (STO) up 15c to 1314c after one broker upped their recommendation to a “Buy” from a “Hold” with upgraded earnings forecasts and an upped target price as well.
- WIN Corp, owned by Bruce Gordon has won the battle to secure Southern Cross’s (SBC) Newcastle-based NBN Nine affiliate for $105m. Publishing & Broadcasting (PBL) were hot on their tails after looking to add another acquisition on top of the $250m paid for Newcastle-based NBN Nine affiliate earlier in the year. PBL down 7c to 2125c.
- Australian retail sales have come in weaker than expected up just 0.1% in April, economists were expecting a 0.5% increase but some did say that the slow Easter holiday period could have pumped up March and slowed spending in April.
- A rather disappointing debut for the Contango Capital (CCQ) listing this morning. Listed at $1. Price now $1. Of course if you give fund managers $1 it is worth $1 less fees and the funds which have yet to be invested, will be mostly invested in unlisted businesses and may take some years to come to fruition. So the price is actually not too bad. Some were hoping (every small fund manager with equity in his own business) it would come on a huge premium after the Platinum Asset Management listing, but it hasn’t. Sanity prevails.
- Monadelphous (MND) has had a profit upgrade. Price up 10.3% or 130c to 1390c. Good news for the whole mining services sector.
We have started a new section in the Marcus Today newsletter today called “Subscriber Stuff” – it allows you to say what issues you would like addressed (to the value of all) and to highlight for everyone’s benefit the stocks you think are ten baggers. It is effectively a “filtered forum”. It allows online investors to get full service general advice. Hope to see you on there. (It is open to subscribers only).
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