Morning Market Report, Jun 04, 2007

Great start for the week, the market up 52 or 0.8 %. The SFE Futures suggested a 3 point rise in the market this morning.

The Dow Jones was up 40.4 on Friday – It moved in a 68 point range and closed in record territory for the twenty-sixth time this year on the back of takeover activity and encouraging economic data. CKX Inc, the holder of the rights to American Idol closed up (37%) after it agreed to be taken private by its chairman and chief executive and the Dow Jones Co finished 15% higher after the Bancroft family said it would meet with Rupert Murdoch to discuss his takeover offer. In economic news, the Labour Department reported a steady 4.5% unemployment rate and the government announced core personal consumption expenditure increased 0.1%, slightly lower than the 0.2% rise economists had predicted. All three major indexes had a good week, the S&P 500 increased 1.4%, the Dow Jones closed 1.2% higher and NASDAQ gained 2.2%.

Resources having a great day. BHP up 76c or 2.4% to 3293c and RIO up 104c to 9693c. Metals mostly up on Friday, Copper up 0.9%, Zinc up 1.7% and Copper 0.9%. Aluminium down 0.1%. Zinifex up 24c to 1800c. Oil price up $1.07 to $65.09 after four foreign oil workers were kidnapped in Lagos, Nigeria by a group of gunman wearing security force uniforms. Woodside up 33c to 4404c. Gold up $10.20. Newcrest up 44c to 2219c.

We’ve had a volatile month in May with the market moving more than 50 points on over half the days. The ASX 200 put on 109 points last week or 1.71% and a big 2.98% in May. It has now had ten consecutive months of gains and is up 10.28% so far this year, helped by the Dow Jones which has put on 10% in the last two months.

Timbercorp (TIM) up 22c or 10% to 207c after announcing they have received approaches over the past few months on a confidential basis by parties interested in acquiring the company or merging. The stock was down 42% so far this year before today’s announcement. Great Southern Plantations (GTP) up 13c or 5.4% to 250c on the back of TIM’s announcement.
Fortescue Metals (FMG) up another 4.12% or 170c to 4120c on no news. This morning Ansteel (Chinese) have bought a 12% stake in iron ore stock Gindalbie Metals (GBG) in an attempt to secure iron ore supply. Another endorsement of the prolonged iron ore demand story. GBG up 9%.
Alumina’s (AWC) CEO John Marlay told CNBC Asia on the weekend that he expected growth in consumption of aluminum to double by 2020, all very good for their AWAC joint venture with Alcoa. He also had some bullish comments highlighting new opportunities if Alcoa was to be successful in their takeover bid for Alcan. Let’s not forget the talk about Alumina becoming a takeover target themselves. AWC up 3c to 787c.
Macquarie Airports (MAP) up 7c to 419c after saying they are not going to make an offer for the 55% of the Rome Airport they do not already own. The Rome Airport stock was up 8.2% on the speculation last week in Italy. A bid would reduce the chances of a capital return to MAP shareholders after the sale of their $420m stake in Birmingham Airport.
AWB (AWB) has hit a 10 month high on the back of the government’s decision to leave it in control of wheat exports and a good start to winter cropping. AWB up 14c or 3.7% to 396c.
Austar (AUN) confirmed that talks with Foxtel had been terminated but they are having preliminary and as yet incomplete talks with other third parties. The Foxtel bid was supposedly at 180c. Price now 169c.
Australian Private Equity Group Archer Capital has raised $1.36bn for a fifth fund in the biggest Australian private equity raising yet. The money has come 50% from Australian institutions and the rest from overseas.
Rinker (RIN) down 32c to 1883c, it has gone ex-dividend 25c today and Cemex has upped their shareholding to 41.6% from 39.4%.
Leighton Holdings (LEI) up another 3.1% today. It was up 28% in May alone. No news. They announced a profits upgrade last month and a JV with an Indian contractor making them one of the biggest contractors in India.
Coles Group (CGJ) up a bit today on weekend suggestions that TPG (private equity group) is still in the chase for the company and that the company is considering selling some assets and leaving the Food & Liquor business as the listed entity.
Citibank have downgraded United Group (UGL) to a SELL. They have a 1566c target price. Below the share price of 1690c. UGL up 6c to 1700c.

We have an article in Marcus Today called “Bassai Dai”. Karate practitioners will know what that means. It makes the point…enjoy the journey or you will never make it to the end. It applies to all walks of life including investment.

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