The market is up 16. The SFE Futures suggested a 7 point rise in the market this morning.

The Dow Jones was up 45.5 on Friday moving in an 88 point range and closing in record territory for the second consecutive session on the back of takeover activity and better-than-expected earnings results. Energizer Holdings Inc. offered $1.16bn for Playtex Products Inc., and after missing out on Alcan, Alcoa closed up 4.6% on talk that it will be bid for (by BHP?) — the market has been supported by more than $1.4 trillion worth of acquisitions this year. Homebuilders closed higher on expectations Warren Buffett may buy a stake in Hovnanian Enterprises Inc.; General Electric hit a five-year high after doubling their share buyback program and Exxon Mobil closed up 2% after another rise in the oil price. It was a big week for all three major indexes, the Dow Jones closed up 2.2%, the S&P 500 finished 1.4% higher and the NASDAQ gained 1.5%.

Resources mostly down today…BHP down 13c to 3304c and RIO down 306c to 9824c. Metals mixed on Friday, Nickel down 1.8% and Aluminium down 0.3%. Copper up 0.7% and Zinc up 1.3%. Zinifex up 4c to 2064c. Oil price up $1.34 to an 11-month high of $73.89 on concerns about reliability of North Sea production. ConocoPhillips announced the closure of North Sea’s Central Area Transmission System saying it’s unsure regarding the amount of output lost. Woodside up 70c to 4748c. Gold down $1. Newcrest up 16c to 2473c.

The markets had a big one last week, particularly in the US, the Dow Jones index put on an impressive 2.17%. (It would have finished the week flat if not for the big 284 point gain on Thursday) Our market was a little less volatile finishing higher on 3 of the 5 trading days and gaining a modest 0.68%. We have a busy week coming up, quarterly production reporting season kicks off with Rio Tinto (RIO) and Woodside (WPL) reporting on Wednesday and Thursday respectively, Harvey Norman (HVN) follows Woolworths (WOW) bumper sales numbers last week with their own 4th Q sales numbers on Wednesday and in the US, the main economic numbers this week are the US CPI and PPI numbers. We have started this week on a positive note, retailers up on better-than-expected consumer sentiment in the US and the banks are also doing nicely.

  • Investors are continuing to punish Rio Tinto; the price is down another 285c or 2.8% to 9850c today. There are mixed responses by analysts and brokers, some are suggesting they overpaid for Alcan, others are backing RIO’s bullish call on a stronger aluminium market. The other factor of course is that RIO will not be bid for so easily. Remember the stories about BHP bidding with a sum-of-the-parts valuation of $117. Now a fading memory. RIO was $83 before those stories broker back in April.
  • The RIO CEO Tom Albanese was on the ABC Inside Business program on Sunday saying “We do see China growing between now and say 2015 at roughly a nine per cent year on year GDP growth rate. That’s a little bit lower than the current rate of 11%, but we still see that as a very robust level, and we see also probabilities of a continuing at a healthy growth rate even past 2015. And again as I said earlier, India is five years at least behind that”.
  • Credit Suisse say a 100% equity-funded bid by BHP Billiton (BHP) for Alcoa would make BHP the biggest aluminium producer and increase earnings by 25%. Aluminium, which has been the worst performing base metal in the past 5 years, currently contributes 7% to BHP’s earnings, but acquiring Alcoa could boost FY08 earnings by 25% to US$18.62bn. Even a 100% debt funded bid could lift FY08 earnings by 9% to US$16.32bn.
  • Fortescue Metals is still in a trading halt whilst it puts together its US$300m institutional placement. Southern Cross Equities and JP Morgan are lead managers. The suggestion is that the price will be at around $37-38 with the last traded price at 3950c. The stock is in a trading halt until Wednesday morning.
  • Consolidated Minerals (CSM) up 15c or 4.6% to 341c after announcing this morning a 75% total shareholder return for FY2007. They are currently reviewing their profit outlook for FY08 because of recent increases in manganese prices and will announce an improved outlook in the near future. CSM shareholders will vote on the existing takeover offer from Pallinghurst, talk is that Territory Resources (TTY) will launch another bid.
  • Coates (COA) up 7c to 600c on ongoing takeover speculation. COA announced a “strategic review” last month and open their data room this week to interested parties. COA up 18% in the last quarter and down 3% in the past 12 months.
  • Merrill Lynch cut their profit forecasts for Publishing & Broadcasting (PBL) on concerns about increased competition and regulatory challengers, currency movements and a fall in VIP wins rates at Crown Macau. PBL down 2c to 1981c.
  • The US dollar continues to weaken against all currencies. The Aussie dollar is on 18 year highs and the US dollar on all time lows against the Euro. Here are some of the currency impacted stocks: RMD, BXB, BBI, MIG, PPX, JHX, COH, ANN, TEL, ALL, LLC, MCG, RIN, CSL, CPU, ILU, SGM, QBE, BBG, MAP, FGL, WOR. Running into the results season these stocks are unlikely to surprise on the upside.
  • The Rinker/Cemex bid closes today at 7pm. Stockbroker back offices all over Australia will breathe a sigh of relief – no more acceptances to rush through.

I have an article in Marcus Today today called – “No present like the Time”. The most precious gift you can bestow upon anybody these days is time. Simply showing up, being there, giving them a call is more of a gift and a compliment than anything you could possibly buy.

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

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