The market is down 48 and falling. The SFE Futures suggested a 12 point fall in the market this morning — despite Wall St being up — probably because the Dow was falling quite rapidly into the close in the US and because some after hours results in the US caused some after market share price falls (Yahoo! down 2.1%).
The Dow Jones was up 20.5 – It moved in a relatively narrow 79 point range and closed in record territory for the fourth consecutive session on the back of takeover activity and better-than-expected earnings results. Lyondell Chemical closed 17% higher after agreeing to a $14bn cash offer from billionaire Len Blavatnik’s Access Industrial Holdings, and Plains Exploration & Production made a $3.6bn cash bid for Pogo Production. In earnings results, Coca-Cola finished 1.3% lower despite reporting better-than-expected 2Q earnings and Yahoo Inc. closed 3% higher despite announcing a poor quarterly profit and providing a weaker-than-expected forecast for the end of 2007. The Dow index surpassed 14,000 for the first time reaching 14,021.95 in early trade before weakening late in the session. The NASDAQ also had a good session closing 0.6% higher.
Resources struggling today after falls in metals prices and resources stocks overnight…BHP down 19c to 3800c and RIO down 8c to 9742c. Metals mostly down overnight, Nickel down 1.9%, Copper down 1.5% and Zinc down 2.1%. Aluminium up 0.2%. Zinifex up 5c to 2000c, there are still stories about an Oxiana bid which I think is unlikely (otherwise why would the OXR MD mention it to the press). Oil price down 8c to $74.03 on news that an Exxon Mobil refinery in Texas returned to service after routine maintenance. The Energy Department’s Energy Information Administration reports on fuel inventories tomorrow, analysts are expecting refinery utilisation to increase by 0.5% to 90.7%. Woodside down 71c to 4583c. Santos up 16c to 1416c on the back of plans to build an LNG plant for $5-7bn on the east coast at Gladstone. Gold down 40c. Newcrest up 2c to 2437c.
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- The big story yesterday is faltering this morning – the Orica bid story. The Orica price rose from the open yesterday on talk of a bid at $37 and closed up 5.5% at 3170c. They confirmed a private equity approach at $32 back in April which they rejected. The bid came from a Morgan Stanley-advised private equity group, including U.S. buyout groups Bain Capital Partners, Blackstone Capital Partners and Australia’s Pacific Equity Partners. Of course the bond markets then fell, bond yields went up and the private equity ambitions were curtailed (APA bid for Qantas failed and all the private equity groups pulled out of the bidding for Coles). You have to wonder whether private equity has the appetite for an Orica bid now. A $37 bid would cost $11.516bn. Orica down 80c to 3090c. The rumour is a private equity bid.
- Fortescue have completed their institutional placement raising A$504m at $36. The price is a touch disappointing against a market price of 3950c and a rumoured placement price of $37-38. Word is that the domestic institutions have not been favoured leaving them even more underweight. Fortescue not surprisingly down 5.57% or 220c to 3730c this morning — still a healthy premium above the $36 placement price. Since Andrew Forrest retired as a Director of Anaconda Nickel, Minara (as it was renamed) is up 479%. Fortescue is up 46,578%.
- Oxiana (OXR) have had “sound” Quarterly production numbers and announced they are on track to meet full-year production and cost forecasts despite lower-than-expected gold output from Sepon due to rain, but say they are on target to produce 100,000 ounces of gold from Sepon for the year. No such problems with copper production, OXR reported higher copper output from Sepon and said the Prominent Hill development remains on time and on budget. OXR down 8c to 389c.
- David Jones (DJS) have upgraded their profit guidance on the back of strong trading conditions in 4Q and “industry restructuring” (Myer changing focus downmarket). “Trading through the fourth-quarter clearance has been outstanding, delivering a 10 percent like-for-like increase”. They say FY net profit should be up 32.6-34.2% compared to forecasts for 30% and profit guidance is up to $107.5m-$108.9m from expectations of $105.5m. And half growth is expected to be 37-42%, well up from the guidance of 8.5-13.5%. The stock is up a big 100% in the past year and is still going strong. DJS up 9c to 561c. All good news for the retail sector coming into results season.
- Iluka have downgraded profit guidance on the back of a rising A$. They now predict $55-65m for the full year well down on the $90-100m expected. ILU down 12c to 576c.
- AGL Energy (AGK) up 13c to 1614c after announcing a pro forma profit forecast of $321m for 2007 saying they expect profit for 2008 to be at the upper end of forecast range of $380m to $400m. AGK is up 4.5% in the last week.
- Arrow Energy (AOE) is in a trading halt until Friday morning pending a capital raising. AOE is up 298% in the past 12 months and last traded at 247c.
- After a strong rally since the Alcan bid from RIO, Alumina is now settling back on suggestions from Merrill Lynch that Alcoa could be bid for without a bid for Alumina. They suggest selling into any hype over a bid for Alumina when/if Alcoa get bid for (by BHP?).
- News Corp seems to be getting closer to taking over the Wall St Journal – it will be put to the vote of the Dow Jones board today having reached an in principal agreement. Even if they get board approval they will still have to get the Bancroft family with 64% onside. NWS up 35c to 2790c.
- JP Morgan predicts the ASX 200 will hit 6890 by the year end. That’s 10% up from here.
Have an article in Marcus Today called 2 BUYS 2 HOLDS 2 SELLS.
Seems only half the world got “Victoria Beckham: Coming To America”. Hilarious. My wife and I killed ourselves laughing. Seems the critics missed the fact that Posh was taking the Mick. A London sense of humour maybe, lost on the Americans who take it all so literally. Couldn’t believe the array of Hollywood Socialite surgery victims. Posh 1 – Critics 0 – Hollywood 0
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