The market is up 17. The SFE Futures predicted a 21 point rise in the market this morning.
The Dow Jones was up 82.1 overnight – It moved in a 97 point range and closed above 14,000 for the first time on the back of better-than-expected earnings results. The Dow Jones went from 13,000 to 14,000 in just 59 trading days, more than twice as fast as its previous 1,000 point advance, the S&P 500 also closed in record territory. In economic news, the Conference Board said the Index of Leading Economic Indicators fell by 0.3%, more than the 0.1% fall economists predicted and the oil price continued its run pushing energy stocks to record highs. The NASDAQ had a big session closing up 0.8%; IBM, Hewlett-Packard, Microsoft and Google all reported earnings. Google closed down 7.4% in after-hours trading after they disappointed with their results, and Microsoft’s 4Q result was mediocre as a result of paying more than $1bn to fix faulty Xbox video-game consoles. Down 2% in after hours trade.
Federal Reserve Chairman Ben Bernanke has further exacerbated the subprime mortgage market concerns overnight saying that there are clearly going to be substantial financial losses linked with subprime problems. He has estimated losses tied to the subprime market of between $50 bln and $100 bln. On the back of that, the financials sector was one of the worst sectors overnight.
Resources are finishing the week off strongly…BHP up 70c to 3838c and RIO up 185c to 9930c. Metals all up overnight, Nickel up 3.6%, Zinc up 2% and Copper up 1.8%. Aluminium up 1.6%. Zinifex up 11c to 1996c. Oil price up 87c to $75.90 after an electrical outage disrupted production at an oil field in Angola, cutting production by more than half. Woodside up 18c to 4660c. Gold up $4.40. Newcrest down 2c to 2455c.
I went to a presentation last night from AusTrade on China. I could write all day about it. It is part of a Melbourne Football Club initiative to visit China and develop business links at the invitation of the Major of the City of Tianjin which is twinned with Melbourne. They will be running football clinics with 15 players with a view to holding a full exhibition match in a couple of years. They also see the prospect of Chinese company sponsorship developing in Australia. They are simply taking the little steps….who knows where it will lead. The big steps will look after themselves. Anyone interested in doing business in China and joining Max Walker and myself on the trip (10 days, 4 cities, sightseeing, golf, functions, networking, business deduction and a lot of fun) please contact James Taylor on 03 9652 1110.
- The usual old argument over CEO remuneration packages has emerged once again after Macquarie Bank’s (MBL) AGM yesterday. Macquarie Bank shares are up 1137% from under $7 to $91.74 since it listed in 1996, the 16th best performer in the ASX 300. It is up 45% in the last year alone. If shareholders don’t like the salaries the Directors are paying themselves they should simply vote with their feet, sell and go and find a stock that outperforms Macquarie Bank. The rest of us can hang on. MBL down 158c to 9016c.
- India seems to be a popular joint venture destination for Australian companies, Woolworths (WOW), Leighton Holdings (LEI) to name a few and now QBE Insurance (QBE) have announced a JV deal with Rajan Raheja Group (RR) to establish a general insurance company in India. QBE will have a 26% stake in the JV company and RR will hold the remaining 74%, QBE will be allowed to up their stake to 50% once they get the go ahead by Indian legislation. QBE up 8c to 3080c.
- Consolidated Minerals (CSM) have recommended a new cash $752m (330c per share) offer from Pallinghurst Resources. Their board says this bid offers greater certainly, calling Territory Resources’s (TTY) cash and scrip offer “complex” and highly geared. The new offer is for all the issued capital, but has a minimum acceptance of 50.1%. Pallinghurst is targeting 60% control leaving CSM shareholders with the option of selling part of all of their holdings. CSM last traded at 350c. TTY is up 10% after announcing their first shipment of ore.
- Goodman Group (GMG) became a substantial shareholder in ING Industrial Fund (IIF) buying a 9.4% stake for $261m. IIF up a huge 33c or 13.7% to 273c this morning, this is despite GMG saying the investment is a debt funded strategic holding and wouldn’t make much of an impact on gearing levels. The prospect of another wave of “consolidation” in the sector is a welcome relief from recent underperformance although there are only a couple of stocks really participating in today’s fun.
- Goldman Sachs JBWere changed their recommendations today on most of the companies they cover after altering their ratings systems to favour target prices over their rather conservative looking valuations. Speaking of which, they cut their West Australian Newspapers (WAN) to “sell” from “hold” saying they share price is getting ahead of itself. They have a 1366c target price. WAN down 53c to 1474c.
- Some traffic data out this morning for Macquarie Airports (MAP) – traffic at Sydney airport up 7.1% from last year, domestic and regional traffic was also up 7.8% while International traffic increasing 6.1%. MAP up 4c to 411c.
- Arrow Energy (AOE) up 19c or 7.7% to 266c after they completed a $125m share placement raising. The offer was heavily oversubscribed with interest from Australian and international investors. 53.2m shares were placed at 235c a share.
- $A /$US reached another 18 year high overnight of 88.1c on carry trade related demand.
Not sure the outlook for Wall St is that good tonight after a 7% fall in Google after hours. The market is up this week – Friday is always a good day to take some profits off the table. I have an article in Marcus Today today on China as well as a bit of a re-cap on the main takings from the weeks play.
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