The market is up 13. The SFE Futures suggested a 30 point rise in the market this morning.
The Dow Jones closed up 71.3 overnight moving in a 102 point range and closed up for the second consecutive session on the back of takeover activity and positive inflation data. It was up despite a small rise in 10 year bond yields. The Labour Department announced core PPI which excludes volatile food and energy costs, increased by an expected 0.2% in May (the headline number was up 0.9%, more than expected). A good number – no inflation threat in other words. Goldman Sachs Group closed down 3.4% after announcing 2Q earnings were affected by a slowdown in its mortgage business and Bear Stearns reported their first Q earnings drop in more than two years on the back of an increase in home-loan defaults. The NASDAQ closed 0.7% higher.
Resources performing strongly today on the back of higher metal prices overnight. BHP up 45c to 3435c and RIO up 180c to 9770c. Metals all up overnight. Aluminium up 0.4%, Copper up 2.2% and Zinc 1.3%. Zinifex up 12c to 1873c. Nickel up 4.7%. Oil price up $1.45 to $67.62 on the back of some big technical buying by hedge funds on the yesterday’s government report showing refinery utilization fell last week. Woodside up 39c to 4491c. Gold up $3.20c. Newcrest down 2c to 2333c.
A bit quiet on the news front this morning.
- Nickel stocks mixed today on conflicting news, Nickel price up 5% overnight but Goldman Sachs JB Were have published their research on the nickel price this morning. They say “Our question is not if but when do you sell the nickel stocks?” and “Ringing the bell for nickel – Fundamentals deteriorating; we expect the price to fall much further”.
- Insurance companies all down along with gaming stocks.
- Fortescue (FMG) in a trading halt with plenty of press this morning that they are planning a $1bn capital raising led by Citigroup involving shares and capital notes. They are spending $2.35bn on Phase 1 of their construction which is expected to deliver 45m tons of ore pa with first shipments next May. The money is supposedly to help them increase that to 100m tpa although there is some suspicion that it is also a reaction to bloating development, labour and capital costs. Maybe this is the next phase for Fortescue Metals – worrying about cost over-runs. Price 3495c, down from 4175c this month and up from 1208c (190%) in 6 months.
- Brokers are upgrading Toll Holdings (TOL) this morning to a “Buy” after announcing yesterday they would bid for the 74% of Sembawang Kimtrans Logistics it didn’t already own. Credit Suisse have a 1490c target price. ABN AMRO upped their target price to 1575c. This follows plenty of positive research last week after they split into two and listed Asciano.
- Woolworths (WOW) up 13c to 2713c after announcing they will appeal the NZCC decisions to reject their bid for NZ’s The Warehouse Group.
- Summit Resources (SMM) down 13c or 3.68% to 340c. The stock is in decline and has been since April 11 when it was trading around 600c and was trading around 508c on June 1 when Paladin Resources (PDN) closed its scrip-based offer.
- JB Hi-Fi (JBH) received a few broker downgrades this morning despite announcing yesterday they would begin selling mobile phones with Telstra as their exclusive partner. Citigroup maintained their SELL recommendation saying “the margins are very low and partnering with Telstra can often end in tears, if the experience of other phone retailers is a guide.” Goldman Sachs JB Were has an OUTPERFORM/BUY.
- ANZ Banking Group (ANZ) have appointed Alex Thursby who is currently Senior Managing Director and Group Head of Corporate and Institutional Client Relationships, Wholesale Banking at Standard Chartered Bank in Singapore. ANZ unchanged at 2885c.
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