The market is down 3. The SFE Futures suggested a 24 point rise in the market this morning.
The Dow Jones was down 5 moving in a 110 point range and closed slightly lower as the Federal Reserve decided to leave interest rates unchanged at 5.25% for an 8th straight month saying, economic growth should “expand at a moderate pace”, inflation is still a problem and that a housing slowdown won’t stop the economy from expanding. It appeared to snuff out the last vestiges of hope for an interest rate cut this year. In other economic news, 1Q GDP growth was revised to +0.7% from +0.6%, the slowest growth in four years while the core consumer price index increased by 2.4%. Energy stocks had another strong session after a 1% rise in the oil price, and in takeover activity, General Motors closed 2% higher after announcing they would sell their Allison Transmission commercial and military business to an investment conglomerate and private equity firm. The NASDAQ had a quiet session closing 0.1% higher.
Resource doing ok today… BHP up 21c to 3510c and RIO up 54c to 9890c. Metals mostly up overnight, Copper up 2.3%. Aluminium up 1.3% and Zinc 1.2%. Nickel down 2.2%. Zinifex up 7c to 1858c. Oil price up 63c to $69.61 after rising above $70 a barrel for the first time since September last year. A government report showed gasoline inventories unexpectedly fell last week. Woodside up 48c to 4621c. Gold up $5.60. Newcrest up 23c to 2315c. ABN AMRO upped their target price for NCM to 2355c from 2136c and maintained their HOLD recommendation.
It has been yet another impressive financial year – The ASX 200 is still up 23.4% despite its recent falls. Average annual returns since 1936 have been about 9.5% (not including dividends) or 12.5% including dividends. Including dividends the ASX 200 is up 28.4% this year, more than twice the average. Even at an average return you would double your money every 6 years and triple it every ten. In the last four years you have more than doubled your money. In fact you would have made 145% including dividends. A Golden Era (well… a golden few years anyway).
It’s the last day of the tax year. Any tax loss selling needs to be done today. We could tell you the worst performers this year but it is irrelevant. What matters is what losses you actually have in your own portfolio. Only you know that. Your opportunity to deprive Costello of a few dollars.
- Commander Communications (CDR) came out of its trading halt this morning after announcing an earnings downgrade. Based on a worst case scenario, they expect EBITDA before restructuring costs to be around $65m, down from $80m-$90m. Not good news…it’s their second earnings downgrade since August last year when they predicted FY EBITDA of between $95m to $101m. CDR down 30c or 20% to 122c. The analyst here says they will have a much bigger 2008 because of this and that it looks like they have just decided to take all the pain in 2007 in a house cleaning exercise. He reckons they are a buy on weakness on record lows. There is also the added spice of a possible bid.
- CSR Ltd (CSR) announced they have bought glass manufacturer Pilkington Australasia for $690m – The acquisition is to be funded by debt and generate synergies of around $20m a year by 2010. CSR has been a big underperformer this year despite takeover talk. The stock is down 5% this month and in down 2c to 345c today.
- Consolidated Minerals (CSM) announced they are rejecting the $849m takeover offer from Territory Resources (TTY) – they mention significant concerns about the TTY offer and say they are going ahead with the Pallinghurst Resources offer instead. CSM down 1c to 318c, TTY still in a trading halt at 148c.
- MFS Ltd (MFS) announced this morning that Managing Director Phil Adams will resign to take charge of the company’s international expansion in Dubai. MFS up 4c to 578c.
- Both Tattersall’s (TTS) and Tabcorp (TAH) doing it tough today ahead of the 100% indoor smoking bans to take effect in NSW and VIC next week. TTS down 1c to 471c and TAH down 21c to 1707c. Goldman Sachs JB Were say TAH is like to trade sideways as the search for the new CEO continues. Both companies report their FU results in August.
- Toll Holdings (TOL) has made a full takeover bid for Toll New Zealand offering NZ300c a share. TOL down 20c to 1428c – no big surprise as they already held 84% of the company.
- Incitec Pivot (IPL) has been an outstanding performer this year. ABN AMRO yesterday upped their target price by 30% to 8384c after upping their FY07 profit forecast by 9.7% to $199.1m and FY08 by 6.6% to $221.1m. They’re expecting a “stronger-for-longer fertilizer pricing environment”. IPL taking a breather today, down 158c to 7470c.
- Every Day Mining Services (EDS) a mining services company (hot sector) listed a 40c today and is now 56c up 40%. The sector should have a good run into results season and a great series of results if the profit upgrades from Monadelphous and WorleyParsons are anything to go by.
- Talk on the newswires about Wesfarmers bidding less than 1647c for Coles Group. Seems the corporate departments can structure it to get around the fact that they originally bid higher. Coles up 8c to 1622c. WES up another 78c to 4558c. Hopefully you are on it. It will become about the 6th biggest stock in the market and in doing so will come onto the radar of almost all international institutions. It will move from being a large diversified Australian stock they could buy to being one of the Largest Australian monopoly icon stocks they have to buy.
In MARCUS TODAY we have an update on the Dog Portfolio Theory – This is the theory that you can buy the worst performers in an index in any one year and they will outperform the next year. Nice thought, rubbish you may say, but in Australia it has been true for the last 6 years. We take a look at the ASX 100 Dog Portfolio in the last financial year and see how they have gone this year. We also tell you the Dog Portfolio for next year. Woof Woof.
There are two more days to get your subscription to the MARCUS TODAY Newsletter and still participate in out fabulous end of year promotion to win one of three big black sexy glossy Flatscreen Widescreen Xtremeview 22” LCD Multimedia and Gaming computer monitors (the ones we use). If you’re going to sit in front of a screen all day….make it a good one. If you subscribe to Marcus Today this week (before the tax year end) you will also get a great deal on subscription rates. (Subscription costs are deductible expenses in some hands).
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