The market is up 35. The SFE Futures suggested a 55 point rise in the market this morning.

The Dow Jones closed up 126 moving in a 128 point range and closed 1% higher on the back of takeover activity, encouraging economic data and declining bond yields. The Institute for Supply Management indicated a fall in the prices paid index, suggesting inflation might be easing, along with a better-than-expected manufacturing index for June. In takeover activity, BCE closed higher after accepting a $32.6bn offer from Ontario Teachers Pensions Plan Board, Virgin Media confirmed it had been bid for by private equity for $11bn and AT&T announced it would buy Dobson for $2.8bn. Trading volumes were down ahead of the Independence Day holiday on Wednesday, US markets will close early tonight as a result. The NASDAQ had a good session closing 1.1% higher.

Resources doing well today…BHP up 67c to 3572c and RIO up 225c to 10025c. Rio Tinto (RIO) announced they would spend $1.8bn on expanding their Yarwun Alumina refinery in QLD – more money for refinery expansion means less money for takeovers. Speculation of a takeover bid for Alcan might now slowly disappear as a result….which could be a relief for the share price. Metals mostly up overnight, Aluminium up 1.2%, Zinc up 3.2% and Copper 2.2%. Nickel down 0.8%. Zinifex up 13c to 1879c. Oil price up 64c to $71.11 closing above $71 for the first time since November last year on the possibility of increased tensions with Iraq as well as refinery problems. Woodside up 70c to 4640c. Gold up $8.30. Newcrest up 26c to 2324c.

  • RBA Meeting today. After the weak retail sales numbers and building approvals numbers this morning there is little need for a rise. Decision at 9.30am tomorrow.
  • The market is doing well today on the back of Wall Streets strong gains overnight. Wesfarmers (WES) was down first thing this morning. WES currently down 273c from 4296c. This price fall today is an adjustment to take account of them paying 1725c instead of 1647c for CGJ and having a higher scrip element to the bid (increasing earnings dilution). With the headline bid worth 1725c….the fall in the WES price this morning has dropped the bid to 1641c. Less 35c for the time value of money and we have a bid worth 1606c. CGJ is down 63c to 1549c. Truth is, the WES bid for Coles was never worth $17….except for a split second when the WES price crossed on the close on Friday. The WES price was also (rather conveniently for a scrip bid) up from 3808c to 4573c in the last month and up from 4270c in the last week. That left it a bit vulnerable as we have found out this morning.
  • No announcement yet from Macquarie Media (MMG) and Fairfax (FXJ) bidding for Southern Cross Broadcasting (SBC). The expectation is that MMG and FXJ to bid for SBC in a deal worth $1.26bn implying a share price of 1740c versus 1644c now (6% premium). MMG 20% owned by Macquarie Bank (MBL) will on sell the Radio stations (3AW, 2UE) to Fairfax for $500m and TV Stations are to be merged with MMG’s regional radio business. First media deal since the media legislation changes took place in April…about time I say. WA News enjoying the speculation in the sector…up 40c to 1450c.
  • Packers Fund Manager Ellerston Capital Ltd (Packer is Executive Chairman) listed their Ellerston GEMS fund this morning at 11.30am. The code is EGF. They listed 240m shares at 250c raising $600m. The GEMS Fund is a listed investment company (LIC) and will be investing in global equities and “Special Situations Investments”. EGF down 6c to 244c. If you give a fund manager $1…its worth $1 less fees after all.
  • Further bad news for Sigma Pharmaceuticals (SIP), after rival Healthscope (HSP) beat them to Symbion Health (SYB), SIP announced this morning they expect a flat NPAT compared to the 10%-15% rise previously expected. They also announced an on-market share buyback of up to 9.9% of its ordinary shares as part of their ongoing capital management strategy. SIP down 31c to 181c.
  • Toll Holdings (TOL) declared their offer for Sembawang Kimtrams unconditional. Asia will be a hunting ground for TOL as they hope to increase their market share and expand their logistic network in the region via acquisitions. TOL up 28c to 1498c.
  • Crane Group (CRG) announced they would buy Kingston Bridge Engineering for $100m. CRG unchanged at 1620c and in a trading halt pending a $60m placement.
  • APN News & Media (APN) up 6c to 577c, they have decided to reinstate their share buyback now that Independent News won’t be taking them over. Good news for shareholders.
  • United Group (UGL) is up 88c to 1766c (+5.24%) on the back of a $220m contract win.
  • The Aussie dollar his a 22 year high hitting 86.02c. Watch out for the currency inspired profit warnings ahead of the results season.
  • Retail sales numbers this morning are much weaker than expected. Down 0.1% against forecasts for a 0.1% rise. The April number was also revised down from +0.1% to -0.3%. Doesn’t look like the tax cuts have kicked in yet.
  • May Building Approvals are also weaker than expected down 5.6%. No need for a rate rise by the look of it.

We have an article in the Marcus Today newsletter today about the Coles bid from Wesfarmers which includes what all the brokers think. Not a lot of it reads well for WES. We also include the results of the 2007 Stock Picking competition so far… with reasons for the stock picks. Become a member today – ring Cath on 03 8660 7347 for a promotional code.

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