Morning Market Report, Apr 30, 2007

The market is up 18. The SFE Futures suggested a 13 point rise in the market this morning.

The Dow Jones was up 15.4 – It closed in record territory for the third consecutive time despite a weaker-than-expected estimate of 1Q economic growth and the oil price surging ahead. A Commerce Department report showed that the US gross domestic product grew at annual rate of 1.3% in the 1Q, its slowest pace in four years. In takeover news, Citigroup completed the biggest ever acquisition by a foreign company in Japan after it acquired brokerage Nikko Cordial Corp. for $7.7bn and airline stocks closed lower after JP Morgan Chase lowered its recommendation on several carriers, saying there is no upside potential. It was a great week once again for the 3 main indexes, the S&P 500 increased 0.7% and is now around 2% below its high of 1,527.4 reached in March 2000, both the NASDAQ and the Dow closed 1.2% higher.

Resources have started the week off OK…BHP up 13c to 2352c and RIO up 23c to 8233c. Metals mostly up on Friday. Copper up 1.1%, Aluminium up 1.5% and Nickel up 3.1%. Zinc down 1.0%. Zinifex down 20c to 1650c. Oil price up $1.37 to $66.45 after Saudi Arabian authorities said they had arrested more than 170 people suspected of plotting to attack the country’s oil fields. Despite hitting 8 month high’s, the oil price is down 6.4% from a year ago. Woodside up 20c to 3345c. Gold up $3.80. Newcrest down 35c to 2345c after it downgraded its full year production guidance from its Telfer mine because of heavy rain. NCM has had 3Q production numbers today. It now expects to produce about 620,000 ounces of gold for the full year instead of previous guidance of 675-700,000oz.

The market has followed Wall Street’s positive lead on Friday and has started the week off in positive territory. Property trusts and banks are all up this morning. It is supposed to be a quiet one today amid the Golden Week holidays in Japan and ahead of holidays in Europe and most of Asia tomorrow.

Paladin (PDN) has secured a controlling interest in Summit (SMM) meaning the takeover bid is automatically extended by two weeks to 11 May. PDN currently has a 59.45% stake in Summit, with France’s Areva sitting on a 10.5% blocking stake.
Policy shifts by both major political parties to expand the uranium industry has put a rocket under uranium stocks which are going ballistic – Energy Resources (ERA) up 2.6%, Nova (NEL) up 5.1%, Alliance (AGS) up 9% and Deep Yellow (RCG) up 9.5%.
Orica (ORI) down 36c to 3175c despite reporting a 39% increase in 1H earnings to $203.1m, a result that has obviously benefited from the integration of the $1.3bn worth of assets it purchased from Dyno Nobel (DXL). ORI rejected a $9.95bn takeover offer at $32 from a private equity consortium led by Bain Capital last week which resulted in many brokers putting a 3500c target price on it. Interesting to note it is now below that bid price. It hit 3486c at its recent peak.
Australian Airline Partners (APA) has announced that its offer will close unsuccessfully unless acceptances representing at least 50% of Qantas’ (QAN) shares are received by 7pm Friday. APA has a voting power in QAN of 12.57%. QAN up 1c to 533c. It is their last throw of the dice, trying to scare you into accepting.
The South Australian Resources and Energy Investment conference is going on today and tomorrow. For those of you trading small resources companies you should have a quick squizz at the timetable published in the Marcus Today newsletter today to see if your favourite stock is presenting.
Just Group (JST) down 28c or 6.15% to 427c after announcing the completion of a $65m buyback priced at 390c a share. They bought back 16.7m shares or 7.7% of the company. 380c is a fully franked dividend. There was a 59.8% scaleback. The money lands in bank accounts on the 4 May. A lot of it might be expected to find its way back into JST.