The market having a surprisingly strong day. Up 65 on the back of a 1 point fall in the US and a 24 point rise in the ASX 200 Futures this morning. ASX 200 has been up 76.
The Dow close down 1. Quiet night on Wall Street overnight. Metal prices, commodity prices and resources up again as the US$ falls (making commodities cheaper). Oil price hit its year high. Gold price up $2.20.
The main driver today is the resources sector with financials putting in a contribution as well. BHP has added 18 points to the index on its own. All sectors up. Brokers are beginning to do their numbers on the BHP-RIO deal and its all good. BHP up 3% to 3761c and RIO up 2.66% to 7249c.
Making the news…
- Downer EDI (DOW) reaffirmed its guidance for the year with earnings growth expected to be at the bottom end of their 10-15% range and ahead of last year’s profit. Work in hand was $13.5bn, with a “steady order book”. It has also refinanced “a significant portion” of its debt maturing next fiscal year.
- Kagara Zinc (KZL) will undertake an equity raising of a minimum of $150m and maximum of $262m. They will strengthen their balance sheet and improve working capital.
- Karoon Gas Australia (KAR) raised $149.6m from an institutional placement and intends to raise more capital from a share purchase plan. It has sold just over 22m shares at 670c a share.
- Qantas (QAN) CEO Alan Joyce says it is plenty of uncertainty in the aviation market, not just about revenue but also about exchange rates and oil prices.
- West Australian Newspapers (WAN) plans to cut around 5% of its full time staff to reduce costs. It expects the restructure to result in a one off charge of around $10m before tax.
- AED Oil (AED) will eliminate 15% of its convertible unsecured notes with major holder Linden Advisors in exchange for cash and AED shares.
In other news…
- Macquarie Group (MQG) has apparently submitted a revised recapitalization proposal to Oz Minerals (OZL), which offers a 79% premium to the Minmetal deal.
- Credit Suisse cut Boart Longyear (BLY) to Underperform from Neutral after its rival reported a 4Q net loss with sales down around 60% from last year.
- Consumer Sentiment has had a huge jump — up 12.7% in June compared to May. Helped no doubt by the idea we have escaped a recession. Biggest jump in 22 years. Highest number since January 2008. No wonder the retailers are up today … everyone thinks its all over.
- Retailers flying along after the JB Hi-Fi earnings upgrades yesterday. Seems discretionary retailers are doing OK. JBH up 6.6%, TRS up 3.8%, DJS up 3.9% with WOW, HVN and BBG up 2%. Perhaps on the back of that the builders are up as well. Boral up 3.2% with the chart in uptrend after a recent pause.
- Merrill Lynch has upped its earnings forecasts on BHP and RIO after a slew of commodity price upgrades. It seems we are in the upgrade cycle now in commodity prices with brokers upgrading just to keep up with reality.
- Some Midcap resources having a good day on the back of the strong rises in metals prices. Nickel stocks in particular are up with PAN up 5.7%, WSA up 11%, MBN up 4.9% and MRE up 5.2%.
- CSL Ltd has had it target price upgrade by most brokers this morning after announcing a share buyback.
The Dow Futures suggest a 14 point gain on Wall Street tonight.MARCUS PADLEY is the Author of the MARCUS TODAY Daily Stockmarket Newsletter.
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