Market down 10 points. Financials and resources slightly down and industrials slightly up. The Futures were unchanged this morning.
Dow closed down 20. Main story in the US was Mars bidding for Wrigley for around $23bn with Berkshire Hathaway providing $6.5bn in financing. Low volumes and a tight range – it seems no-one wants to do much ahead of the FOMC decision tonight. There is an 80% chance of a 25bp cut. Two thirds of economists expect a rate cut of 25bp with some suggestions this will be the last rate cut this year – in other words it could mark the trough on interest rates. 240 of the S&P500 companies have reported earnings – 70% have been above expectations. Materials sector in the US (resources) one of the worst sectors, down 1.2%. Tech stocks also down. Continental Airlines (down 1.51%) called off a proposed merger with United Airlines (down 2.63%). Oil hit a new all time high at $119.93 and closed up a touch at $118.77 up 23c. Metals mixed. Bonds up a touch.
- Both BHP and RIO down in ADR form on Friday, 2.33% and 1.77% respectively. BHP up 19c to 4379c. RIO down 100c to 14250c.
- Metals mixed overnight – Both Nickel and Zinc down 0.7%, Copper up 0.9% and Aluminium up 0.5%. Zinifex up 6c to 1017c.
- Oil price down 86c to $118.78 despite the Forties Pipeline System that carries more than 700,000 barrels of oil a day to the U.K. being shut down because of a 48-hour walkout by employees at a refinery in central Scotland. Woodside down 75c to 5735c.
- Gold up $5.80 to $895.50. Newcrest down 125c to 2775c.
- US Bonds up with the 10 year yield down to 3.82%.
The RBA meets on Tuesday next week – they are expected to leave interest rates on hold at 7.25% despite the recent higher than expected CPI numbers.
- Babcock & Brown (BNB) announced it has upped its stake in Portuguese highway operator Brisa to 15.1% from 10%. It bought 10% of Brisa for EUR590m last year. It also announced it had recruited a team of 8 experienced investment professionals in India to complement BNB’s existing activities in India. BNB down 21c to 1426c.
- Alumina (AWC) has appointed John Bevan to succeed John Marlay as the company’s CEO from June 16. Previously, Bevan was an executive director of U.K. gas major BOC Group PLC and was responsible for its global business line. AWC up 2c to 604c.
- Aditya Birla flying along after their after hours production numbers last night. Levi Spry from Patersons Securities dsays “Copper remains the preferred commodity for some forecasters and with continued strikes at Codelco’s (world’s largest copper producer) operations in Chile prices are may be set to reach new highs in the short term. Longer term we see upside to our conservative long term price assumption of US$1.50/lb and ABY provides tremendous leverage to this through its higher cost production from its Mt Gordon operations. A 10% increase in our copper price increases our price target by 85cps or 29%”. ABY up 25c to 285c. Credit Suisse have upped their copper price forecast this morning.
- ABB Grain (ABB) says they have no new information to explain the recent share price rise. The stock is up 15% in the past month. ABB up 19c to 1020c.
- Midwest (MIS) is in a trading halt pending an announcement that may influence its takeover. Sinosteel Corp has offering $954m for the Midwest shares it does not own.
- Aristocrat (ALL) held its AGM today – they say results for the calendar year will be flat… in line with 2007. ALL down 38c to 766c.
- Pan Australian Resources (PNA) said its Phu Kham copper-gold operation in Laos has started concentrate production and was ramping up to steady output. PNA up 2c to 121c.
- Atlas Iron (AGO) up 14% this morning after Merrill Lynch initiates research coverage with a BUY with a $6 target price saying it could be $10 in three years. Now 274c up 33c.
We had a presentation from the BHP CFO this morning. They talked about “Super Diversified” stocks being the future in resources. For details on that see MARCUS TODAY.
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