Morning Market Report, May 15, 2007

The market is down 35. The SFE Futures suggested a 36 point fall in the market this morning.

The Dow Jones was up 20.5 overnight – The Dow was the only US index to rise. It moved in an 86 point range and closed slightly higher on the back of corporate activity in what was a quiet session on Wall Street, most are holding out for tomorrow’s inflation data. The Dow was the only US index to rise. The market expects the April CPI to have increased 0.5%, slower than in March. DaimlerChrysler closed 2.6% higher after announcing it will sell 80.1% of money-losing Chrysler Group to private equity firm Cerberus Capital Management for $7.4bn and Cardinal Health has agreed to buy Viasys Healthcare for $1.42bn. Tomorrow will not only bring inflation and housing reports, but also quarterly financial results from blue chips such as Home Depot and Wal Mart. The NASDAQ closed down 0.6%.

Resources struggling today, BHP down 44c to 3084c and RIO down 66c to 9216c. Metals all down overnight, Nickel down 3%, Zinc down 2.5%, Zinifex down 41c to 1739c. Aluminium down 1.6% and Copper down 3.2%. Oil price up 20c to $62.55 on reports of refinery problems in the US and abroad. The announcement from Chevron Corp saying it plans to restart a 42,000 barrels-per-day Nigerian oil facility put some downward pressure on the price. Woodside up 85c to 4285c. Gold down $2.20. Newcrest down 33c to 2252c.

The big news today is the decision by the Chinese government to relax investment laws for Chinese Banks by allowing them to invest 50% of their funds in overseas stocks. Prior to this they were not allowed to invest abroad. This could amount to over US$2 trillion of investment and the most obvious sector for investment is in resources. This maybe explains the 10% rise in Fortescue Metals (FMG) yesterday. The Chinese are coming (maybe they are already here).

Macquarie Bank (MBL) went into a trading halt after hours yesterday, they are doing a capital raising expected to be $700m to fund international growth. Their final results were very good this morning, as you would expect when they are trying to sell shares. NPAT up 60% to $1.46bn ahead of estimates of $1.39bn. Dividend up 47% to 315c. MBL still in a trading halt, last traded at 8950c. They still have a chance to be the first stock to cross the $100 market – the race is on with RIO which peaked out at 9969c and peaked out at 9218c.
Today is your last day to buy Santos (STO) for its $300m share buy-back and still qualify for the franking credits under the 45 day rule. STO down 3c to 1295c.
Auspine (ANE) up 25.4% or 123c to 607c after Gunns (GNS) made a $332m takeover bid for it after successfully acquiring a 25% stake auctioned by major shareholder Bethal Nominees. GNS has offered $6.15 or 1.83 GNS shares for every ANE share. GNS last traded at 341c making the offer worth 624c.
ANZ Bank (ANZ) announced it has over 80% of E*Trade Australia (ETR), the offer closes today. They can extend it and probably will if they don’t get 90%. It will be interesting to see the CBA and ANZ go head to head in on line broking. My prediction….one day they will be offering the service to their banking customers for nothing. A banking client is far more valuable to them and harder to acquire.
Redbank Mines (RBM) up 3c or 17% to 17.5c after reporting first exploration drilling results from the target area, with one hole intercepting 64 meters from surface grading 2.5% copper.
Toll Holdings (TOL) have announced a $100m three year contract signed with LinFox (LinFox using Pacific National’s rail freight services). Toll down 29c to 2321c.