Morning Market Report, May 21, 2007

The market is up 37. The SFE Futures suggested a 65 point rise in the market this morning.

The Dow Jones was up 79.8 on Friday – It moved in an 85-point range and closed in record territory for the 24th time this year on the back of takeover activity and promising economic results. Retailers had a good session after the University of Michigan index of consumer sentiment came in slightly better-than-expected in May and energy and resources stocks made significant gains on the back of a firm oil price and another spike in metal prices. ExxonMobil up 1.78%. In takeover activity, Clear Channel Communications accepted a revised $19.5bn offer from private equity and Aquantine closed 77.8% higher after it agreed to a $6bn cash offer from Microsoft. Trump Entertainment Resorts was also in the news; it gained 21% after it announced interest was shown in the company. It was another good week for the market, the Dow Jones increased 1.73%, its seventh straight week of gains, the S&P 500 increased 1.12% but the NASDAQ lost 0.15%.

Resources doing well today, BHP up 29c to 3100c and RIO up 59c to 9150c. Metals all up on Friday, Nickel up 3.2%, Zinc up 1.3% and Aluminium up 0.5%. Zinifex up 23c to 1748c. Copper up 0.3%.

Oil price up 10c to $64.93 on the back of warmer-than-expected weather in the Northeast of the US. Woodside up 33c to 4365c. Gold up $4.80. Newcrest up 24c to 2244c.

Good start to the week…It’s not looking too busy this week, Alinta (AAN) has its AGM tomorrow — they have accepted the Babcock & Brown consortium bid instead of Macquarie Bank’s offer. Their main game will be selling that decision. Babcock & Brown have their AGM on Friday. Other AGMs of note include Dyno Nobel (may reflect on Orica) and Pan Australian (Gold project in Laos – Copper in Thailand).

The Chinese have upped interest rates, relaxed trading in the yuan and up bank reserve requirements (again) but the markets are unmoved and Washington unimpressed. It seems to be a gesture and no more towards cooling the economy and the Chinese stockmarket. If anything it suggests the Chinese are comfortable with 11.1% GDP growth and that they see no need to curtail it – it is not out of control. All positive.
JP Morgan has come out saying that takeover activity is to remain high domestically with interest rates still low and with the stock market remaining at an all time high. Potential targets include — Austar United (AUN), Silex Systems (SLX), Commander Communications (CDR.AU), AWB (AWB) and even Westfield (WDC).
Computershare (CPU) mentioned in Street Talk in the AFR today, JP Morgan are speculating on a private equity bid for Computershare suggesting that the management (Chris Morris) has an “active dislike” dealing with the market so may be suited to private equity ownership with other registry businesses already having ended up in the hands of private equity. CPU up 15c to 1142c this morning. They talk about a $13 bid price.
APN News & Media (APN) have their scheme meeting on Friday to vote through the Independent News takeover bid at 620c. On Friday Perpetual with 14.8% declared they would not be voting for the bid. INM owns 41.6%. If the bid fails they say they will keep their stake. They can always up the price now or come back later. The stock is up from 478c before the bid. APN down 20c or 3.34% to 578c.
AWB (AWB) has interim results this week and John Howard will present a new wheat marketing structure to the coalition party room. The Nationals want the single desk to be given to a de-merged AWB International…all states support the structure except for South Australia and some WA farming groups who want the WEA to be allowed to grant multiple licenses to accredited companies – this is supported by listed wheat distributors ABB Grain, Graincorp as well as CBH. AWB up 8c to 362c.
Paladin Resources (PDN) up 34c or 4% to 879c after saying the friendly takeover of Summit Resources Ltd. (SMM.AU) will proceed despite what the Takeover Panel had to say. There is a uranium/nuclear power lunch today with Ziggy Switkowski and a uranium presentation in London from RIO tonight – likely to be (very?) positive on the outlook for the uranium price and RIO’s operations. They are a company under siege with rumours that BHP or CVRD will bid for them. They need to pump.
OneSteel (OST) up 18c or 2.87% to 646c after it signed a contract to supply 6 million tons of iron ore to Shanxi Haixin Iron & Steel over 10 years, starting July 1.
Slater & Gordon (SGH) has made an impressive market debut at 130c against its 100c IPO price. They raised 35m fully paid shares and are forecasting 2007 NPAT of $9.1m on revenue of $58.7m. Market cap around $125m.
Kagara Zinc (KZL) is in a trading halt pending the release of an announcement by Wednesday.
Goldman Sachs JB Were have upped their recommendation on Qantas to OUTPERFORM/BUY this morning. QAN up 3c to 525c.
Macquarie Bank is ex dividend 190c today and is now up 3c to 9713c…some performance. Carried its dividend in two hours.