The market is up 7. The SFE Futures suggested a 55 point rise in the market this morning.

The Dow Jones closed up 92 overnight moving in a 178 point range and closing higher for the first time in three sessions on the back of some takeover activity, positive earnings results and bargain hunters buying after two days of significant falls. In takeover activity, Ingersoll-Rand announced they were selling their Bobcat earth-moving division along with two other units to Korea’s Doosan Infracore for $4.9bn, and Verizon Communications Inc. said their joint venture with Vodafone Group, Verizon Wireless will pay $757m for Rural Cellular Corp. There were loads of broker recommendation upgrades overnight after two days of heavy falls, blue chips such as Wells Fargo, Home Depot, Terex Corp. and KB Home were all upgraded to “Buy”, one broker even said Home Depot shares could potentially double in the next three years thanks to store upgrades and share buybacks. Despite last night’s gains, the Dow Jones Index is still down 4.8% from its July 19 record close of 14,000.41, the S&P 500 and NASDAQ indexes also had a positive night, they closed up 1% and 0.8% respectively.

Resources all up today…BHP up 28c to 3707c and RIO up 30c to 9206c. Metals mostly up overnight, Copper up 1.1%, Aluminium up 0.1% and Nickel down 0.8%. Zinc was unchanged. Zinifex up 49c to 1974c. Oil price down 21c to $76.82, taking a breather after closing one cent away from its record high on Friday. Woodside up 28c to 4303c. Gold up $4. Newcrest up 17c to 2470c.

The Futures suggest a 55 point rise in the market this morning on the back of the point rise in the Dow Jones and the 25.9 point rise in the ASX 200 yesterday. Are we seriously going to forget this correction as quickly as we did the last ones. Looks like it (for today at least). Yesterday the SFE Futures predicted big falls, the market closed on its highs. Today the SFE Futures predicted a 55 point rise and we are now only 10 points up – looks like the market can’t really make up its mind on which direction it wants to go. Iron Ore and Copper stock doing well today, gambling stocks not so good. Were’s say the domestic macroeconomic outlook remains OK and the recent correction should be looked at as a buying opportunity.

  • A lot of talk that the Wesfarmers bid for Coles will be revised to include a higher cash element in light of the fall in the WES share price since the bid was announced. CGJ up 13c to 1433c. WES up 4c to 3682c. WES is now 3682c implying the bid is worth 1471c, less 38.3c (WES dividend) = 1433c, less time value of money (2% = 29c) makes the bid worth 1404c. A far cry from the 1725c headline number they originally claimed. The Coles price at 1433c is clearly reflecting the possibility of the bid being improved. Despite the WES price trading close to the “walk away” price for Coles both parties are thought to want to pursue the deal at whatever cost.
  • Arrow Energy (AOE) up 11c or 4.1% to 278c after announcing they have signed a letter of intent with PetroChina, the Chinese government-owned oil and gas company relating to a gas project in the Xinjiang region in northwest China. The letter is for the negotiation of the production-sharing contract relating to gas. Warren Buffett recently sold Berkshire Hathaway’s entire holding in PetroChina.
  • Flight Centre (FLT) getting smacked today after announces they have terminated a proposed joint venture with private equity group Pacific Equity Partners after a report commissioned by Ernst & Young found the deal was neither fair nor reasonable. FLT down 163c or 8.5% to 1764c. FLT has been a great performer, up 55% in the past 12 months.
  • Lion Nathan (LNN) up 12c to 857c after reaffirming their FY forecast of a flat profit and said commodity prices were starting to take their toll. They also said they wanted to achieve 5%-8% revenue growth and 7%-10% growth in EBIT. Capital management initiatives have been put on hold because of the corporate development activities.
  • Mount Gibson (MGX) up 5c to 150c, they announced a record FY NPAT of $47.7m, up 103% from the last year.
  • Australian Worldwide Exploration (AWE) up 2% or 7c to 345c on the back of their June 2007 quarterly report with record full year sales and output.
  • News Corp has said it is “highly unlikely” to proceed with its $5bn bid for the Dow Jones Company if it doesn’t get more support from the Bancroft family. Failing to get the Dow Jones Company would not be positive for News Corp in the short term. NWS up 10c to 2658c.
  • Suggestions in the AFR that Leighton Holdings (LEI) bought most of the 41m share traded in Macmahon Holdings (MAH) yesterday taking its holding up to 12% from 4.9%. This follows their recent proposal to MAH to take a 30% stake which was rejected. LEI said yesterday that they were not about to bid for MAH. MAH up 4% or 5.5c to 140.5c this morning. LEI up another 3.58% or 134c to 3876c.
  • The Sydney Morning Herald is pre-empting the Qantas restructure with details of a plan to break the company into four business units which will be owned by Qantas but may allow other investors like Linfox and Allco Finance Group to get involved (AFG were one of the original bidders that failed with the APA bid).
  • Australian Building Approvals were up 7.5% in June up from a 5.7% drop in May raising hopes of a housing recovery.
  • Independence Group (IGO) are up 3% on their quarterly report.
  • STW Communications (SGN) is down 9% on a profits warning out after hours yesterday. They expect flat to minus 5% earnings growth for the full year against guidance in March of up 10-20%. They remain confident of stronger earnings in 2008.
  • Smorgon Steel (SSX) shareholders have approved the takeover of Smorgon Steel by OneSteel (OST) with Blusescope (BSL) selling 19.9% of SSX to OST in exchange for the SSX metal distribution business. OneSteel will become the dominant producer of long steel products, such as bars, wires, pipes and rail for the construction and mining industries.

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