Morning Market Report, Apr 27, 2007

The market is down 66. The SFE Futures suggested a 3 point fall in the market this morning.

The Dow Jones was up 15.6 moving in a narrow 64 point range and closing in record territory for the second consecutive session on the back of promising earnings results and takeover activity. It’s been a solid earnings season to date, 22 of the 30 Dow companies have reported earnings so far with 16 of them beating analysts’ expectations. Homebuilders closed higher after Meritage Homes said the housing market may have bottomed and ABN AMRO is in hot water with its own shareholders after it announced it would opt for the $86.4bn buyout offer from Barclays and not the higher offer from the Royal Bank of Scotland. The NASDAQ had a positive session. Microsoft reported a 65% increase in 3Q earnings to $4.93bn on revenue of $14.4bn. Its stock was up 4.2% in after market hours.

Resources down today…BHP down 53c to 2363c and RIO down 103c to 8380c. Metals all down overnight. Copper down 2.6%, Aluminium down 0.4% and Zinc down 1.2%. Zinifex down 15c to 1638c. Nickel down 0.6%. Oil price down 25c to $65.08 on the back of some profit taking and warmer-than-expected weather in the northeast. Woodside down 2c to 3238c. Gold down $9.40. Gold down $9.40. Newcrest down 20c to 2340c.

Rinker (RIN) up 14c to 1878c after posting a FY profit of US$782.4m, up 5.7% from last year. Not a bad result considering the US property market is in depression. RIN is subject to a US$14.24bn takeover bid from Cemex worth 1868c on today’s currency.
Flight Centre (FLT) up 28c to 1661c after announcing FY profit is up 18% to date and is ahead of expectations. This is coming from a company that couldn’t say a good thing about itself in its quarterly profit results ahead of a plan to go private that fell through. There’s a new deal on the table now from Pacific Equity Partners and all eyes will be on whether they sweeten the deal. Worth noting that with the strong A$, international travel is booming. Qantas has been bid for, Flight Centre has been bid for….all that’s left is Virgin Blue (already on all-time highs).
Dyno Nobel (DXL) up 1c to 239c after agreeing to buy a 50% stake in South African initiation systems manufacturer Sasol Dyno Nobel for US$34.5m. It previously owned a 40% stake in Sasol prior to Industri Kapital selling it to a Macquarie Bank-led consortium in 2005.
Alumina (AWC) unchanged at 718c despite fresh takeover speculation after JV partner Alcoa said it is looking to divest some of its downstream business and talk is that BHP Billiton (BHP) of Rio Tinto (RIO) are waiting with cash in hand to pick up the rest when they do.
Telstra (TLS) has been traveling under the radar recently. They have unveiled the largest fully integrated wireline and wireless national Internet Protocol network in the world, the Telstra Next IP network. They have invested $1.5bn to date in the Telstra Next IP network to establish the largest business network in Australia, servicing 95% of businesses. Its stock is holding up well today and is down only 3c to 461c. It hit its year high of 496c this month.
Tabcorp (TAH) down 22c to 1733c. They put out a statement the other day saying they have not been approached regarding any takeover proposal.
United Group (UGL) down 20c to 1550c after denying any knowledge of the Leighton bid rumour that has pushed the price up from 1350c this month already.
Santos (STO) bucking the trend up 6c to 1121c as Merrill Lynch upgrade it to a BUY. They have a SELL on Zinifex after its quarterly production numbers this week.
Kagara Zinc (KZL) up 9c to 609c as Goldman Sachs JB Were add it to their “Conviction list”. They have also dropped all their nickel stock recommendations to HOLD from BUY after making the early call that the nickel price could have a significant correction.