The market is down 30. The SFE Futures suggested a 15 point fall in the market this morning.
The Dow Jones was down 11 – It moved in a 67 point range and closed slightly lower despite better-than-expected economic data and continuing takeover activity. Hilton Hotels closed up 26% after agreeing to a $20.1bn takeover offer from Blackstone Group, Huntsman Corp. announced they had received a $6bn offer from a Dutch company, and there was talk that Coca-Cola Co. would be entering the iced tea market and are considering making a bid for the Cadbury Schweppes Snapple Ice Tea division. In economic news, the Institute of Supply Management service sector index increased to a better-than-expected 60.7 in June, a reading above 50 indicate a growing economy. The NASDAQ closed 0.4% higher helped by Apple Inc., its shares closed in record territory for the second consecutive session. Not good news for rival Microsoft, they announced pre-tax costs of $1.15bn relating to repairs of their Xbox 360 game consoles.
Resources mostly down today…BHP continuing to hit record highs, up 31c to 3741c,and RIO down 63c to 10188c. Metals mixed overnight, Copper up 0.4% and Aluminium 0.2%, Nickel down 0.4% and Zinc down 1%. Zinifex up 15c to 2015c. Oil price 40c to $71.81 despite a report from the Energy Department showing oil and gasoline inventories increased last week. The price was pushed higher due to the continuing unrest in Nigeria. Woodside down 25c to 4667c. Gold down $4.80. Newcrest up 8c to 2334c.
Quiet day today – not much company related news. Banks are down along with most property trusts and rural stocks. The main focus for us is the Australian results season starting on 1 August. If there are any companies that have now seen their year end numbers and know they are more than 10% above or below analyst expectations they are likely to have a profit warning or profit upgrade this month. The companies most at risk are perhaps the currency affected stocks with the A$ at 18 year highs there has clearly been some pain. The currency also provides them with the perfect excuse for disappointing.
- Sonic Healthcare (SHL) announced the acquisition of New York based Sunrise Medical Laboratories Inc. for US$148m. The deal is conditional upon US antitrust approval, will be earnings accretive and will be funded by debt. SHL has been forced to look in the US and Europe for acquisitions due to competition worries in Australia, although it means increased macroeconomic risks, SHL management have a history of integrating businesses efficiently. SHL up 16c to 1502c.
- There is an article in the AFR today suggesting the recent rebound in Sally Malay’s (SMY) share price is due to takeover speculation. SMY was up a big 31c or 7% to 474c yesterday, they announced the finding of “significant” nickel deposits at its Copernicus project (SMY owns 60% of the Copernicus project – Thundelarra own the remaining 40%) The company is debt free and has plenty of cash in the bank, making it a good takeover candidate.
- Transurban (TCL) released their traffic and revenue data for the June quarter. Toll and fee revenue came in at $85.7m, up 9.7% from last quarter. TOL down 11c to 792c.
- Anvil Mining (AVM) up 100 or 5.2% to 2000c on news that stage 1 of their Kinsevere project has began production of unhedged concentrate from iron ore averaging 9% copper. AVN has been a star performer, up 122% in the past 12 months.
- Goodman Fielder (GFF) down 3c to 247c – Macquarie Bank upped their recommendation to “outperform” after revising the outlook for their New Zealand fresh daily business. They’re a big fan of Graeme Hart and have a 262c target price.
- Woolworths (WOW) up 61c or 2.3% to 2822c on no announcement.
The Rinker risk free arbitrage is opening up every day as the A$ rises. RIN is now 1873c up 23c today. You can buy 2000 shares and sell them to Cemex at 1950c. There are thousands of 2000 share trades still going through in Rinker as people take advantage of it. If you have not got your head around this issue you should – all the details are on the Marcus Today website for anyone to see and there are some broker names and photos who can take your calls if you want to do the deal. If you want to know any details (and we are fielding a lot of questions) call the Cemex hotline – they are all geared up for it on 1300 721 344.
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