The market is down 34. The SFE Futures were down 31 this morning.

The Dow Jones down 125. It was down 159 at worst. Greek negotiations continue in an effort to form government with no immediate solution — the Greek President has called for a “technocrat” government involving all parties — talks continue. A Greek “solution” would lift markets (in the hope that they stay in the EU) and is a potential X Factor for the market that could happen at any time. If no government is formed they will move to elections next month extending the uncertainty and risk (with no guarantee of a result).

Meanwhile a flight to safety sees the US$ up and the A$ below parity, commodity prices down as the US$ rises and Gold down another $27 — Gold has firmly broken the uptrend support line. In a flight to safety US bonds saw 7+ basis point rallies in maturities 10-years and longer. The seven-year note yield touched a record low of 1.679%. Moody’s Investors Service downgraded 26 Italian banks.

Main points:

  • Hastings Diversified Fund (HDF) has received a conditional takeover bid for $1.25bn or $2.35 per share from Pipeline Partners Australia consortium, which includes Caisse de depot et placement du Quebec and Hastings managed Utilities Trust of Australia.
  • Pacific Brands (PBG) says the unsolicited $600m takeover approach from Kohlberg Kravis Roberts received in January this year is unlikely to translate into a takeover bid anytime in the near future. PBG did however reiterate their 2nd H guidance for profit to be materially down and sales to be down as well due to continuing weak retail conditions. Full year earnings are expected to be between $125-$130m. This includes a cash restructuring expense which will exceed previous guidance of $23m to increase to $32m.
  • Mirabela Nickel (MBN) after tumbling 30% have announced a $120m capital raising. The offer will consist of; a $20m placement to Resource Capital Fund V (RCFV) at 40c per share and an 8:13 accelerated pro-rata non-renounceable retail entitlement offer to raise $100m at 30c.
  • News Corp (NWS) will buy a 20% stake in Chinese company Bona Film Group in an attempt to expand their presence in a booming Chinese film market. Bona Film Group’s profit was up 35% to $3.3m in the first quarter, as the box office revenue in China also went up by 29% to $2bn.
  • Coca-Cola Amatil (CCL) expects to record a gain in the 1st H12, resulting from the decision to not proceed with the acquisition of Foster’s Australian spirits business. CCL now expects profit to grow by around 4%-5%. The company also said they will proceed with the acquisition of the Fiji brewing business for a cost of $62m.
  • The RBA released minutes of their board meeting which detailed the reasoning behind the 50bps rate cut. Economic growth, inflation below expectations and ongoing risks from Europe were main the reasons for the rate cut. The RBA is adopting a wait and see approach leaving the door open for future rate cuts if necessary

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