The market is having a good if slightly disappointing day – up 77 and drifting. The Futures said we would be up 150 this morning on the back of Wall Street’s blinder overnight, but the highest we got to was up 97. We peaked pretty much on the open and its been all downhill from there. Despite a real injection of enthusiasm for the recovery and a fair dose of that coming from US financials, we have the likes of the NAB actually down today and the banks and some industrials (TLS, CSL, COH) lagging the rest of the market. Macquarie has risen from the open as it did yesterday, Babcock & Brown has fallen from the open. Macquarie has results in May with rumours they will be good. But Resources take the lead today. Sector up 2.6% against the market up 1.4%.

Dow Jones closed up 257. Biggest rise in two weeks, up 2.1%. First two day rise in over a week. Closed close to its high of 263. Huge night – a big injection of conviction about the market bottoming – rises across all sectors from Financials to Resources to tech stocks (NASDAQ up 2.8%). Even gold was up. Intel the main driver up 5.8% on huge volumes on results including earnings of 29c against estimates of 24c. Outlook statement also good and IBM has had results after hours and jumped 2.84% on top of the 2.82% in the normal session. Weak Housing and Building permits numbers ignored. As were Fed comments about an anaemic housing market.

The big story is the rumour that BHP will raise its scrip bid for RIO from 3.4-for-1 to 4-for-1, valuing RIO at $US200bn+. The story was out of the UK last night. Some scepticism about that this morning. RIO hit an 18 year high in the UK (the currency means it has yet to do so in A$).

  • BHP up 5.37% in the UK and RIO up 5.99%. Up 3.1% and 4.0% in ADR form in the US. BHP up 2.2% or 93c to 4375c and RIO up 590c to 14650c. Rio announced OK productions numbers yesterday. Charlie Aitken at Southern Cross calls BHP a $50 stock today.
  • Metal prices well up in the UK as well. Zinifex up 34c to 1034c.
  • Gold up overnight despite the market rally – Newcrest up 73c to 3410c.
  • US dollar hit a record low against the Euro.
  • Oil price hit another record on a drop in inventories.

Other stories making the news…

  • Woodside Petroleum’s production numbers are out – weaker-than-expected. 1Q production down 4% from last year due to cyclones and a gas plant shutdown in January. GSBJ Were described them as “disappointing” and that both revenue and production was materially below their expectations. WPL still up 77c to 5907c.
  • Babcock and Brown (BNB) have released their annual report – main news to come out of its was that they expect a net profit of at least $750m. BNB up 30c to 1336c.
  • Perpetual (PPT) said its funds under management fell 3.6% to the end of March to $32bn from $33.2bn mainly due a depressed market. The S&P/ASX 300 fell 3.4% in March. PPT down 2% to 5750c. Not a good indicator for results from all wealth management businesses.
  • Wesfarmers is in a trading halt after the AFR said it was planning a multibillion dollar capital raising. Trading will commence once they can “make further announcements to the market in response to that speculation”. WES unchanged at 3697c. After the $18bn takeover of Coles it is clear the costs of financing the acquisition have escalated and the response to a capital raising is an interesting insight on the credit market appetite.
  • Fox Resources (FXR) doing well after China’s Jinchuan Group took an 11% stake in the company paying a 61% premium over Fox’s share price. FXR up 4c to 63c.
  • Wattyl (WYL) doing it tough today after releasing its trading update (profit warning). It now expects 2H EBIT in the range of $10-$12m, compared with $12.8m in the 1H because of difficult market conditions. WYL down 13.8% to 163c.
  • Aquarius Platinum (AQP) announced they have successfully completed its $US366m equity placement raising. AQP up 7% to 1821c on the back of the news.
  • Straits Resources (SRL) is planning to restructure its business by separating its coal assets from the rest of the company. SRL also having a great day, up 9% to 675c.
  • Incitec Pivot up 4.66% as Monsanto jumps 7% in the Us and on broker upgrades this morning.
  • Boral (BLD) announced they have successfully completed an issue of US$382m of Senior Unsecured Notes to institutions in the North American Traditional Private Placement market. BLD up 10c to 612c.