The market is up 72 and rising on the back of a strong night in the US and after the Australian newspaper reported this morning that a Chinese entity had approached an Australian investment fund to partner them in buying a 9% stake in BHP.

Dow up 94. Up 101 at best, down 44 at worst. Quiet trade. Jobless numbers in line. Weak Industrial Production numbers. Weak Empire State Manufacturing Index. Intel up 4.7% on a Lehman Bros recommendation. Retailers up on a 4.7% rise in JC Penney and Tiffany up 6.6% on upped guidance. Yahoo! up 2.3% on a proxy battle for board changes that might lead to a new bid. Financials up. Bernanke said he was “encouraged” by the banks’ ability to raise cash recently – suggesting credit crisis tensions have eased. Tech sector up 2.1% on the back of corporate activity. May’s homebuilder sentiment down for the first time in four months– fell close to record low set last December – it is the worst housing downturn since the Great Depression. M&A activity alive with CBS finalizing a $1.8bn deal to buy CNet, online tech news and entertainment company and General Electric to auction off its Louisville Ky-based appliances business for about $5-8bn – more good news re deal flow and a loosening up of the credit markets.

  • Both BHP and RIO up in ADR form overnight, 3.56% and 4% respectively. BHP up 142c to 4940c. RIO up 257c to 15500c.
  • Metals mostly up overnight – Copper up 2.1%, Zinc up 1.4% and Aluminium 2.3%. Nickel down 0.9%. Zinifex up 5c to 1057c.
  • Oil price up 4c to $124.25c as the expiration of options resulted in the oil price hitting an intra-day record and falling as much as $3. Woodside up 5c to 6307c.
  • Gold up $13.50 to $880.00. Newcrest up 69c to 3149c.
  • US Bonds up with the 10 year yield down to 3.81%.

BHP hit $50 at 10:27am today as the Australian newspaper said that China could team up with local a private equity and superannuation fund to buy a 9% stake in BHP.

Wesfarmers (WES) said contract prices for coal have been finalized and have tripled to $300 per metric tonne, in line with BHP’s contracts recently settled with Japanese buyers. WES up 52c to 4027c.

CBA’s trading update yesterday provided no new sector implications. CBA said it would have increased bad debt charges but that this “represented more of a catch-up to peers rather than any new bad debts that the market had not already known about.” CBA didn’t reiterate guidance to meet or exceed peer group EPS growth. CBA up 1% today on a yield of 6.0% and a PE of 11.9x. ANZ up 3% today. They are on a yield of 5.9% and a PE of 11.9x.

  • The Liberal-National coalition overnight has also said it will use its Senate majority to block Labor’s budget plans for raising the threshold on the Medicare Levy saying “it supports private health insurance”.
  • Australia‘s Transfield Services (TSE) have had a profits warning and have fallen 15% this morning. TSE was already on a fairly Ritzy PE of 20.3x and a yield of 3.7% before the downgrade. TSE down 205c to 1120c.
  • Graincorp has bid for Ridley Corp (RIC). A 1 for 9 valuing RIC at 139c. GNC is down 28c to 1220c and RIC is up 4.5c to 134.5c. Both in a trading halt at the moment. RIC up 7.5c to 137.5c.
  • Leighton Holdings was up 4% yesterday and another 6% today post their results and earnings guidance yesterday and a lot of research this morning. They continue to win contracts and are on a PE of 26.6x and a yield of 2.5%. LEI up 366c to 5647c.

There is an article in the Marcus Today newsletter today looking at the week ahead.

We also have an article in the newsletter today including some extracts from the Shorter Oxford Stockmarket Dictionary. Catch Marcus in the Sydney Morning Herald and The Age on Saturday and on ABC Inside Business on ABC TV 10am Sunday Morning.

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