Morning Market Report, May 24, 2007

The market is down 53. The SFE Futures suggested 10 point fall in the market this morning. Greenspan warning about a “dramatic correction” in the Chinese stockmarket bubble doesn’t help the nervous…who are sitting on substantial profits.

The Dow Jones was down 14 – It moved in a 104 point range and closed lower for the third consecutive session on the back of the pessimistic comments made from former Federal Reserve Chairman Alan Greenspan. Before Greenspan’s comment, strong merger and acquisition activity had pushed the Dow to 13,600 for the first time. Alcoa Inc. was the best performer in the Dow Industrials after advising it’s shareholders to reject the $27.4bn bid from rival Alcan Inc. and Stride Rite (up 31%) accepted an $800m offer from rival Payless ShoeSource Inc. According to financial data provider Dealogic, there have been around $2.3 trillion worth of deals announced so far this year. The Chinese marker hit record high for the third consecutive session and the NASDAQ closed 0.4% lower.

Resources all down today. BHP down 22c to 3115c and RIO down 70c to 9380c. Metals all down overnight, Nickel down 4.3% after a 4.7% fall yesterday, Zinc down 1.6% and Aluminium 1.2%. Zinifex down 37c to 1720c. Copper down 0.8%. Oil price up 19c to $65.10 after the Energy Information Administration reported that gasoline stock increased by 1.5m barrels last week to 196.7m, almost double the 200m barrels had expected. Woodside down 60c to 4402c. Gold up $2.70. Newcrest down 7c to 2225c.

The market is having a stinker today. Nickel suffering after the nickel price took another beating overnight on a further rise in Nickel stockpiles on the LME. Sector has topped out big time. Property trusts and retailers are all down across the board. No big news out today…

Platinum Asset Management (PTM) taking a breather today after yesterday’s impressive debut. The stock is down 30c or 3.5% to 850c. At this price, it is trading on a 2007 PER of 26.5 times. International peers are quoted as trading at 22x to 24x. Not cheap, bit of a frenzy, but people can’t get it out of their heads that Babcock & Brown also listed at $5, came on at $10 and is $32 two years later. The listing alone is enough to provide a short term boost to funds under management of course, so the earnings numbers the float was based on are probably a bit conservative anyway.
Qantas (QAN) up 10c to 552c. They have published slides for a presentation to investors and listed a few alternatives as part of its capital management review which included a possible de-merger or a share buyback as it tries to move on from the failed APA bid. More and more brokers are getting on the band wagon with Goldman Sachs JB Were and UBS both upgrading to a BUY. The stock opened above the APA 545c bid price this morning. Brokers have target prices up to 700c and Macquarie tell us a top of the range private equity bidder could afford to pay over 850c.
Wotif.com (WTF) announced this morning that it was terminating its association with ninemsn by mutual agreement. They did say that it will have no material impact on its earnings result. The market tends to agree, WTF unchanged at 504c.
SP AusNet (SPN) reported a 3.2% increase in NPAT to $161.2m thanks to higher revenue; it declared a dividend of 5.63c a share. Stock unchanged at 147c.
Dyno Nobel (DXL) unchanged at 258c after their Chairman Geoff Tomlinson told shareholders at their AGM that the company’s future is looking promising. He said “strong construction demand growth from China and India, and global supply shortages due to under investment in exploration and new project capital expenditure over the last decade”.
The Sydney Morning Herald has reported today that Publishing & Broadcasting (PBL) is considering a further sell down of media interests and cutting down its interest in PBL Media’s joint venture with private equity group CVC to 25% from 50%. PBL has refused to comment, its stock is down 12c to 2118c.
Nickel stocks taking a beating after a 9% fall in the nickel price in two days. LME stocks rose 1,446 tons to 6,834 tons, up 40% since last week from very low base. The sector is well off the top providing a few opportunities for the optimists. Downside momentum seems just a bit too quick to provoke buying at the moment.
The Commonwealth Bank (CBA) is delivering an analyst presentation on Premium Banking today. Price down 39c to 5479c…much in line with the market.
ABN AMRO has upgraded AWB to a BUY this morning with a 388c valuation calling it a turnaround story. . Price now 338c down 2c. It hit a low of 305c this week.