May 20, 2014

Morning Market Report

Markets stay steady -- both locally and worldwide.

The market is down 11 points. The Dow Jones was up 21 points at 16,512 -- the market range-traded for much of the day, with most of the strength seen in small cap companies and technology stocks. There was no major economic activity and M&A activity dominated news. Cyclical stocks performed well while defensive consumer staples, telecommunications and utilities were weaker. Volume was low in an 84 point range. Corporate activity was a focus -- UK AstraZeneca shares fell 11% after it rejected a takeover bid from Pfizer. AT&T shares fell after it made a US$48.5 billion bid for satellite TV operator DirecTV, a 10.2% premium to last Friday’s closing price. Fed Speak -- San Francisco Fed President John Williams said the central bank is starting to return monetary policy to more normal levels and rates should rise some time in the next year. Dallas Fed President Richard Fisher said Congress was applying an effective "brake" on growth that the Fed cannot overcome with aggressive stimulus. He stressed the need for the Fed to be careful as one misstep could result in out-of-control inflation. Both Fed officials were speaking at the Bush Institute in Dallas and agreed that aggressive stimulus could lead to investors taking excessive risk. European share markets were mixed -- The UK FTSE rose 0.05%, the German DAX rose 0.31% and the French CAC rose 0.30%. But the Greek and Italian markets were weaker, falling 1.99% and 1.60% respectively. European parliamentary elections are at the end of the week and Italian Prime Minister Matteo Renzi is in a weak position. The Aussie dollar was weaker and is currently trading at US93.29c. Oil rose US$0.59 or 0.58% to US$102.61 a barrel. Base metals were stronger -- Zinc rose 1.23%, copper was up 0.86% and aluminium was 0.23% higher. Nickel resumed its rise, up 5.79%. Iron ore fell US$2.20 to US$98.50 a tonne. STORIES
  • FMG -- Has increased the amount of iron ore at their Greater Solomon mine by more than 77%. This adds around 1.16 billion tonnes to 2.66 billion tonnes. The total mineral resource at Solomon Hub is over 4.5 billion tonnes.
  • Treasury Wine Estates (TWE) -- Has received a $3.05 billion takeover bid from Kohlberg Kravis Roberts & Co. but rejected the offer as too low. The offer is valued at 470c representing a 15% premium to the prebid price.
  • Thorn Group (TGA) -- NPAT steady at $28.15 million. Underlying profit up 4.5% to $28.3 million. Financial year dividend up to 11c.
  • Ten Network (TEN 28.5c) -- In the AFR this morning, British television network ITV is in talks with Ten over securing a strategic stake in the company. This means Ten’s major shareholders could be open to a takeover offer. 40% of the company is controlled by four main shareholders -- NWS’ chairman Lachlan Murdoch, FXJ’s Gina Rinehart, CWN’s James Packer and WIN Corp’s Bruce Gordon.
  • Telstra (TLS 526c) -- Telstra is set announce a plan to invest tens of millions of dollars in a national wi-fi network on Tuesday in Sydney. This means that instead of using 3G or 4G network service on your mobile, you will be able to use a Wi-Fi network on your mobile whilst walking around Sydney CBD. That means quicker internet speeds than currently on offer. The wi-fi network will be rolled out across the country and be a public system that lets Telstra customers use broadband services in more locations. Wi-fi networks handle higher speeds and larger internet loads compared to mobile networks that use cell towers.

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