No matter what happened overseas on Friday (and things weren’t bad at all), our market will be influenced by two situations today and for days to come: the multi-billion dollar speculative bid and deals surrounding Qantas and Coles.
The $11.1 billion bid for Qantas is looking very shaky after Balanced Equity said it would vote its four per cent against the takeover from Airline Partners Australia.
UBS Asset Management is known to be opposed and could produce an update on its shareholding today which will show it has boosted its holding above 7 per cent. There’s now talk of one or two other instos also thinking of voting no.
Coles is all about the interim result and possible break up sale: to be sure of winning any deals the price will have to be north of $19 billion for the lot.
That’s why overseas events will not play a great part today and for most of the week on stockmarket sentiment.
But it will pay investors to keep an eye on what’s happening overseas because eventually development theres, especially in the US, will achieve break through.
The US housing industry remains the greatest influence on the US economy and on markets generally so I suppose there would be quite a few people, companies, regulators and the like happy to see Friday’s news that sales of existing homes rose 3.9 per cent in February, the best rise in three years.
But the depressing reality is that the rise was driven by price cutting and was all based on deals done before the subprime and other low-rated mortgage market problems erupted in the US.
The US National Association of Realtors said sales rose to an annual rate of 6.7 million homes from a revised 6.4 million in January.
But the report also revealed the median price of a home sold in February fell 1.3 per cent to $US212,800 from a year earlier; the seventh month in a row that prices were lower when compared to the same month in the previous year.
That is a sign of just how weak the US housing market is and these deals, remember, were done before the problems in the lower rated mortgage sectors.
The median price for an existing house in the US is now 7.6 per cent below the high set in July of last year.
One US analyst likened the situation to the US car industry with prices being slashed, deals offered, just to take excess stocks off the hands of producers and other.
Other analysts wonder what will happen to prices when foreclosure sales step up in coming months: they usually involve prices much lower than the median and while not ‘sell at any price’ do see financiers selling at prices which cover their losses but don’t aim to make profits.
On Wall Street, the Dow rose 19.87 points on Friday, to end at 12,481; the S&P 500 finished a touch higher at 1,436 and Nasdaq eased 2.81 points, to close at 2,448.
For the week, the S&P 500 gained 3.5 per cent, its biggest weekly rise since March 2003. The Nasdaq rose 3.2 per cent for the week, while the Dow advanced 3.1 percent: and all due to the impact of the fed’s policy switch midweek.
