Morning Market Report, May 18, 2007

The market is down 38. The SFE Futures suggested an 18 point fall in the market this morning.

The Dow Jones was down 10.8 – It moved in a relatively narrow 68 point range and closed slightly lower on the back of mixed economic date, despite briefly surpassing 13,500 for the first time earlier in the session. The Labour Department reported a fall in jobless claims for the fifth straight week and the Philadelphia Fed’s May manufacturing index showed a stronger-than-expected increase. The Conference Board forecasted slower economic growth with the leading economic indicators declining greater-than-expected and Ben Bernanke didn’t do the market any favours after acknowledging the number of mortgage defaults was growing in a speech in Chicago overnight. In takeover activity, Alliance Data Systems Corp. agreed to a $6.43bn takeover offer from Blackstone Group and Acxiom Corp. announced it was being bought for $2.24bn by two private equity firms. Energy stocks closed higher thanks to a 3.5% increase in the oil price and the NASDAQ closed slightly lower.

Resources struggling today…BHP down 75c to 3073c and RIO down 128c to 9102c. Metals all down overnight. Copper down 5%, Nickel down 3.3% and Zinc 4.9%. Aluminium down 0.5%. Zinifex down 27c to 1728c. Oil price up $2.26 to $64.83 on the back of speculation that U.S gasoline supplies won’t be able to keep up with demand this summer due to refiners and unexpected disruptions. Woodside up 17c to 4341c. Gold down $4.30. Newcrest down 42c to 2228c.

The market was up 71 points yesterday – looks like someone had a big buy program to execute yesterday afternoon. No sign of it this morning. Metal prices falling with worries about Shanghai copper stocks rising doing the damage.

The AFR has reported this morning that Publishing & Broadcasting (PBL) has pulled out of the race for Nine Network Adelaide. If true, it will be the second time Bruce Gordon’s WIN has beaten PBL in acquiring regional television assets. PBL up 6c up 2106c.
There was a whisper from London overnight that Airline Partners Australia is looking to buy British Airways now that the Qantas (QAN) deal is dead and buried. Goldman Sachs JBWere described it as the “jewel in the crown” for private equity takeover.
Rio Tinto (RIO) down 133c to 9097c. It announced this morning it was forming a jointly owned company (Hydrogen Energy) with BP that will develop clean coal technologies called.
Lihir Gold (LHG) down 3c to 318c after it announced it had completed its retail entitlement offer raising about $212m to add to its $978m raised from its institutional entitlement offer and placement that was completed last month.
Caltex (CTX) down 34c to 2586c after hosting its Marketing Investor Briefing.
Biosignal (BOS) up 5.5c or 52% to 16c on the back of positive test results showing its technology removes corrosion causing bacteria biofilms which are a major problem in the oil and gas industry.
Macquarie Airports (MAP) up 8c to 409c after announcing it agreed to sell just over 24% of Birmingham Airport for £210m, might be a sign for things to come after it said it was reviewing its stake in Rome Airport.
Growing talk of a correction in the market again led by the US which is up 9% in one and a half months. But before you head to the hills you should know this. Since January 2007 the Dow Jones is up a massive…..17%. That’s all. Hardly the performance a major market collapse is made of.
Suggestions that the Future Fund have been approached for their stake in Telstra – the share price is down 8c to 487c this morning – It ties in with the smoke about a bid for Telstra last week. The talk comes because the Future Fund is able to sell its Telstra stake from Monday although it is only allow to sell 3-5% to a buyer. If the overhang sees strong demand and gets cleared up it will be good for the Telstra share price which was up 13c to 495c yesterday on the talk that a number of parties were looking to buy the stock.
Macquarie Bank doesn’t lie down – up another dollar or over 1% after its final results and placement. If you bought last week you’ve made a staggering 9.8% in five days. MBL goes ex dividend 190c fully franked tomorrow. Price 9790c. 1.9% yield on this dividend alone.
Perilya Mines is down 3% on a company update on operations. Looks like the Zinc stocks have topped out in the short term with the zinc price. Momentum lost.
The front page of the Australian says Packer visited Fortescue Metals in his private jet and was shown around its operations. This comes on the back of their Chinese off-take agreement announced yesterday. Their initial production is fully sold. Twiggy’s 38% is worth $3.7bn. First shipments due mid May next year. FMG down 4.76% today. Up 11% yesterday. The Packer story is the icing on the cake, the Chinese deal is out of the way. Traders wondering if anything else can go right in the short term or whether its due a breather.