The market is down 4. The SFE Futures suggested a 2 point rise in the market this morning.

The Dow Jones closed up 43 overnight moving in a 95 point range and closing in record territory for a third consecutive session mainly on the back of corporate activity. The big news overnight was The Financial Times reporting Vodafone Group was considering a $160bn bid for Verizon Communications Inc. in what would be the biggest takeover in history. Applebee’s International Inc. agreed to a $1.9bn takeover offer from restaurant chain owner Ihop Corp., and Con-way Inc. finished 5.7% higher after paying $750m for Contract Freighters. In company related news, McDonald’s Corp. closed up slightly after announcing their 2Q earnings would beat analyst’s expectations, and Mattel Inc. finished 2.5% higher after reporting better-than-expected earnings results. The NASDAQ and the S&P 500 both closed lower.

Resources mixed…BHP down 6c to 3814c and RIO up 90c to 9800c, the stock was pushed 6.5% lower in the previous 2 sessions since US$34bn the bid for Alcan. Metals down overnight, Nickel down 1.9%, Copper down 1.2% and Zinc down 2.4%. Aluminium was unchanged. Zinifex down 2c to 2008c. Oil price up 22c to $74.11 on the back of refinery output worries and concerns about tensions between US and Iran. Woodside down 19c to 4652c. Gold down $1. Newcrest up 1c to 2467c.

The market is undecided today. Apart form the usual takeover speculation, there isn’t much news out today.

  • Publishing & Broadcasting (PBL) up 2c to 1972c after completing the sale of Ticketek and Acer Arena to PBL Media for $210m. No surprises there, on 1 June this year PBL announced CVC Capital Partners and CVC Asia Pacific would pay $515m for an additional 25% share in PBL Media and other PBL businesses. Their NASDAQ joint venture, Melco Entertainment, has had an impressive run recently of late. Its stock closed up 20% last week but is still 27% short of reaching its issue price.
  • Paladin Resources (PDN) was up a big 60c or 6.5% to 888c. The AFR has a story today saying that at least one London Fund Manager has been approached by Cameco Corp (Canadian Co – largest uranium producer in the world) about their holding in Paladin (PDN) and the suggestion is that they are preparing a takeover bid. Cameco recently delayed the timeline for their flooded Cigar lake uranium mine to get back into production so may be looking for a producing asset. Paladin have now denied any approach and knows of no activity and the price is back to 845c up 17c on the day.
  • Some uranium stocks getting sold off today after a Bloomberg article highlighting the 2007 Uranium Report from experts Tradetech. It points out a 72% drop in demand for uranium from utilities and nuclear reactors since the peak on 6 April.
  • Harvey Norman’s (HVN) 4Q sales numbers are out tomorrow – ABN AMRO expects them report a 16.2% increase in 4Q sales. They maintained their “buy” recommendation saying they expect HVN to benefit from increased demand for audio visual and information technology products. HVN up 2c to 550c.
  • UBS Warburg have downgraded Perilya to NEUTRAL from BUY. PEM down 5c to 500c. Macquarie has an OUTPERFORM and a 530c target price.
  • UBS Warburg have also downgraded Western Areas (WSA) by 16% and 11% but remain positive with a BUY recommendation. WSA down 11c to 485c.
  • Macquarie Bank maintained their “outperform” recommendation on Seek (SEK) and predict a 64% increase in FY NPAT to $55.9m for the company. They say record low unemployment conditions and an increase in the number of online ad volumes will mean a record profit result. SEK up 2c to 864c.
  • Another internet stock going great guns is (WTF), the stock is up 18% in the last week and was up another 33c or 5.4% to 625c at its peak today. The company is run by ‘rich but not retired’ CEO Graeme Wood who owns 51m shares. Today’s 5% gain in the share price means he is $16.3m better off today than yesterday.
  • Citigroup predicts 14.3% earnings growth on average from the forthcoming reporting season with 26.7% growth from the resources sector. They list stocks with the greatest potential for earnings upside from forecasts as ASX, CCL, HVN, JST, SEK, SIP and SUN. Disappointments possible from AXA and RMD.
  • The Australian reported James Packer and Lakshmi Mittal (worlds fifth richest man) were considering buying shares in Fortescue Metals (FMG). Talk is that CEO Andrew Forrest will give Packer a private briefing on the company’s progress and operations and promote the shares to Mittal. FMG is still in a trading halt (last traded at 3950c) whilst it puts together its US$300m institutional placement. Southern Cross Equities and JP Morgan are lead managers. Southern Cross expressing some bemusement that local institutions have not supported the stock and that the company have to go to London to raise capital.
  • Territory Resources (TTY) have just announced a bid for Consolidated Minerals (CSM) who are under offer from Pallinghurst Investors. The offer is 200c plus 1.5 TTY shares. Pallinghurst is offering 168c plus two shares in a new CSM for
  • every five shares currently held. Shareholders were going to vote on the Pallinghurst bid next Thursday. TTY’s consortium includes Noble Group of Hong Kong, Austrian trader DCM Decometal and investment bank Lehman Brothers as adviser.
  • Copper stock Aditya Birla (ABY), the company described by two brokers last month as the cheapest stock in the resources sector, had Qly production numbers yesterday described as solid and in line with expectations. ABY up 18% in the past month and up another 11c today to 350c.
  • A$ hit 87.64 overnight – 18 year high. US$ hitting record lows against Euro.

We have an article in Marcus Today today predicting the 2008 Crash. It is based on the performance of the All Ords prior to the 1987 Crash and maps that performance against the market’s current rally since March 2003. The bad news is the Crash will happen on 22 July 2008. The good news is the market will go up 64.6% between now and then.

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Peter Fray
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