The market has started the week off well and is up 64. The SFE Futures suggested a 28 point rise in the market this morning.
The Dow Jones closed up 53 on Friday – It moved in a 109 point range and closed the week in a positive mood on the back of stronger-than-expected earnings results and increased confidence that takeover activity will begin to emerge as a result of lower interest rates. With no major economic news, Wall Street focused on earnings results. Thirteen of seventeen S&P 500 companies that reported this week beat analyst’s expectations and Oracle continued the trend; it hit a 6 year high after announcing better-than-expected earnings numbers. There was plenty of takeover speculation. Mobile phone maker Sprint Nexus was mentioned, Estee Lauder closed up 4.8%, the biggest riser in the S&P 500, and Alberto-Culver put on 5.2% after JP Morgan labelled them an “attractive” takeover target. It was positive week for all three major indexes, both the Dow Jones and the S&P 500 finished 2.8% higher. The NASDAQ nearly matched them, it put on 2.7%. Google closed in record territory on reports by The Guardian that the company is considering a move into the U.K. wireless market.
Resources flying today…BHP up 95c to 4195c and RIO up 234c to 10555c. Goldman Sachs JB Were say Nickel is one of the main reasons BHP had earnings growth and RIO didn’t. BHP’s Nickel division contributed 20% to their earnings. Melbourne’s Herald Sun has also reported this morning that BHP will reveal a resource upgrade for the copper, gold and uranium mine Olympic Damn, making it the largest gold resource in the world. Zinifex up 12c to 1719c. Oil price down 47c to $83.38. The head of the Energy Information Administration said the crude price above $80 a barrel are unsustainable over the next few weeks and months, unless there is a major supply disruption. Woodside up 70c to 4992c. Gold down $1. Newcrest down 55c today to 2801c. Newcrest Mining (NCM) CEO Ian Smith has poured cold water on speculation that NCM is about to merge with Lihir Gold (LGL). Both stock had huge weeks – LGL put on 10% and NCM 13%. Gold is up 12% in the last 3 months.
Markets are a little quiet today. Half of Victoria has headed off for the school holidays. Roads very quiet this morning. Pretty lean week on the finance front – results from David Jones, Myer and Nufarm are mild features on the corporate front. Lightweight week for Australian economics. Busier week for US economics. Some housing related numbers of interest and a Final GDP number. A little busier on the sporting front with Grand Finals all over the place and the Brownlow Medal tonight. Gary Ablett Junior is the favourite to take Charlie home.
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- Publishing & Broadcasting (PBL) and West Australian News (WAN) announced they have agreed to HOYTS to private equity group Pacific Equity Partners. The sale, which is expected to be completed in November and would release around $150m to each PBL and WAN, values the cinema chain’s Australian & NZ operations at around $440m. PBL down 15c to 1853c. WAN down 14c to 1465c. JP Morgan held an Asian Gaming Conference in Macau last week and believes that the “exceptional growth momentum” experienced in Macau to date should continue, and that their overall impression for growth remain favourable. Around 2,381,752 people visited Macau in August, up 24% from last year, and brings the total number of visitors from the beginning of the year to 17.2 million.
- Orica (ORI) doing well today, up 65c today to 2855c. They have agreed to buy US based Excel Mining Systems for US$670m. They tell investors the deal is expected to be EPS accretive almost immediately and that there are plenty of revenue synergies and cost savings to be had.
- Brambles boss Mike Ilhein is in the SMH this morning saying Brambles and Toll are not a good fit. This follows an open invitation from Toll to have friendly talks. Also suggests Asciano (AIO) is not a good fit. BXB up 15c to 1410c today.
- AXA Asia Pacific Holdings (AXA.AU) announced they are considering a possible acquisition of Malaysian Assurance Alliance. The company, along with their Malaysian joint venture partner Affin Holdings has been granted approval from Bank Negara Malaysia, the country’s nation central bank to start negotiations. But they’re not alone; three other parties have joined the table, Allianz Insurance Management Asia Pacific, Kurnia Asia and Nippon Life Insurance Co.
- Sims Group (SGM) has requested a trading halt – they plan to announce a transaction but no details provided. The stock is up 17% in the last month.
- UBS Warburg have initiated coverage on Avoca Resources (AVO) with a “Buy” recommendation and 190c target price saying it is the most attractive gold stock in their coverage. They say Avoca have announced significant new exploration success which should underpin a 10-plus year mine life. The stock is up 30% in the past month.
- Babcock & Brown (BNB) announced the completion of financing for their Trans Bay Cable project in the US. BNB up 58c to 2493c.
- There are a heap of companies going ex dividend today – ABP, AEF, AEU, BBG, BSL, GFF, GMG, IIF, JET, MGR, MOF, MXI, OIF, OSH, PBL, PMV, PRT, RFG, TRS to name a few.
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