Morning Market Report, Jun 21, 2007

The market is down 23. Not a bad performance in light of a big fall on Wall St. The SFE Futures suggested a 47 point fall in the market this morning.

The Dow Jones closed down 146 overnight – It moved in a 191 point range and closed lower on the back of the 10 year bond yield up from 5.09% to 5.15%. There was plenty of takeover activity and some earnings results overnight. Nuveen Investments finished 16% higher after accepting a $5.42bn cash bid from Dearborn Partners and billionaire Kirk Kerkorian’s investment company said they were ending talks to potentially buy MGM Mirage’s Bellago hotel-casino and CityCenter project. Morgan Stanley reported a strong Q profit result as did FedEx Corp. They announced 4Q profit increased by 7% on the back of higher revenue. The NASDAQ also had a nasty session, it closed down 1%.

Resources mostly down today. BHP up 7c to 3462c and RIO down 50c to 9999c. Metals mixed overnight. Zinc down 0.1%, Copper up 1.3% and Nickel down 2.7%. Aluminium up 1.1%. Zinifex down 15c to 1895c. Oil price down 65c to $68.50 after the government announced oil inventory’s increased 6.9m barrels last week. Exxon Mobil closed down 3.5%. Woodside up 14c to 4734c. Gold down $4.70. Newcrest down 30c to 2328c.

The financial year is just about over and the All Ords are up 27.5% this year alone. If it stays that way it will be the biggest increase in a single year since pre 1987 when the market put on 49.5% pre crash. Since the bottom of the market in March 2003, the market is up 140%. In the 4 years prior to the Crash of 87 the All Ords rose 260%. Only another 120% to go.

Plenty of company related stuff going on today.

Coles Group (CGJ) down 30c or 1.8% to 1660c on the back of the AFR reporting today that TPG couldn’t come to an agreement with Woolworths and have pulled out of the bidding for Coles. CGJ released an announcement denying that TPG have pulled out but you would have to suggest that things don’t look good for a counter-bid for Coles. It is obvious that private equity is finding it hard to make the numbers add up. It is obviously in Coles’ interests to keep the bid fires burning and if they haven’t been ended officially, they are bound to make denials. But another bid looks less likely. In which case Wesfarmers and friends are the last hurrah and for Coles shareholders that means a 1647c bid is as good as it gets for now. WES may need to up it a bit to get board agreement but without another bidder…not by much.
Brambles (BXB) have had a trading update this morning. The headline is “Reaffirms positive outlook for year ending 30th June 2007”. CHEP Americas division did well with an 8% increase in sales but the CHEP Europe result (sales growth up around 2%) is not being taken well by analysts and may well lead to downgrades. Whole announcement being seen as a disappointment. BXB down 29c or 2.3% to 1234c.
There is a lot of shenanigans in the bid for Symbion (SYB). Sigma bid first for the pharmacy and consumer businesses. Then Private equity bidders topped their bid at the last minute by a measly $1 and the SYB board jumped in and accepted. Sigma then bid another $20m but after the “deadline”. The SYB board rejected it saying they were too late. SYB down 4c to 421c and SIP up 2c to 228c.
There are suggestions in the Sydney Morning Herald that Telstra (TLS) will face competition to build the FTTN network from Deutsche Telekom. They have yet to put a bid in until details of the tender are available to them. Not great news for TLS, the stock is down 2c to 470c.
St George Bank (SGB) have announced they are on track to meet earnings growth of 11-12% in 2007 and 10% in 2008. It is pretty much as expected. Nothing very new. Price is down a touch today with the rest of the market and the banks. SGB down 19c to 3575c.
There are few positive comments from a few brokers this morning saying Oxiana (OXR) did quite well out of selling their Wiluna gold mine for $29.5m. The stock is up 10% in past month. OXR down 5c to 350c.
Multiplex (MXG) down 1c to 504c despite announcing they’re in discussions with a 3rd party regarding a potential joint venture arrangement for the construction of projects in Southern India. They are under offer at 505c so the fundamentals are not that important.
IOOF Holdings (IFL) up 11c or 1.1% to 990c after they upped their earnings guidance for 2006/07. They now expect UNPAT to be in the range of $28m to $30m, an increase of 20% plus from last year’s $23.3m NPAT result. IFL is up 22% in past 12 months.
Flight Centre (FLT) is in a trading halt pending an announcement about a private equity bid (sort of). We sort of know the details. PEP buying 30% for $1.1bn and the cash being handed back to shareholders. FLT last traded at 1833c.
Uranoz (URO) lists at 11.30am tomorrow. Uranium stock. The issue price is 20c. The company holds the uranium assets of WCP Resources (used to be WC Penfold – stationary). WCP shareholders got a priority offer of 20m shares.