Situations from Qantas, to Rinker, Alinta and Flight Centre, not to mention Coles, will dominate the market this week in Australia as investors give every sign of wanting to take profits.
Some banks and big miners dropped sharply on Friday and investors took profits from the long run up in these sectors over the last two months.
Rio shed $2.19 to $82.70, BHP 83c to $23.39, the ANZ 42c to $30.46, Westpac 29c to $27.04 ahead of its interim profit this week while the CBA and NAB did better with single digit falls.
The big miners were reacting to Thursday’s sharp fall in copper prices overseas so they will probably be a touch stronger today after Friday’s rise. The rise in oil prices to over $US66 a barrel should help BHP Billiton, Woodside and Santos.
The sector to watch locally will be uranium stocks after the narrow vote by the ALP Federal Conference to lift the party’s ban on new uranium mines.
The vote passed 205 to 190 but it was well-telegraphed.
The more interesting move was the unanimous approval of the party’s new industrial relations policy (which was a ‘deal’ to keep union dissent under lock and key).
That would indicate board sections of the ALP believe pragmatism is now more acceptable than ideological purity because they can sniff the best chance since 1998 for a Federal election win.
The Qantas offer will be of considerable interest.
Will Airline Partners Australia get more than 50 per cent to extend the bid for a fortnight and then try and drive acceptances past its lowered minimum of 70 per cent? The 50 per cent level shouldn’t be too hard to achieve, getting to 70 might be a bit tougher.
ON ABC TV yesterday Balanced Equity’s CEO, Andrew Sisson said his group would not be accepting the APA offer for Qantas.
“We are committed not to accept the bid,” Mr Sisson told the ABC’s Inside Business program.
Mr Sisson said the current APA offer did not represent a very good price. Balanced owns around four per cent of QAN.
“In fact, we think it (Qantas) represents one of the better value stocks in the market at the moment, so we would be a buyer rather than a seller,” he said.
Meanwhile in the US the flood of better-than-expected first quarter results have seen analysts boost their first quarter earnings growth estimates to 9.4 per cent from an early 3.1 per cent a fortnight ago.
Despite the sluggish economy many US businesses seem to be doing better than the economic figures would suggest, although the figures have been boosted by the performance of Wall Street firms such as Merrill Lynch and Goldman Sachs.
Also helping sentiment in the US (as in Australia) is a sharp rise in corporate activity with first quarter takeovers up 51 per cent to well over three quarters of a trillion dollars. Much of this is from private equity transactions.
The Dow Jones rose 1.2 per cent to a record 13,120.94 last week, topping 13,000 for the first time on April 25. That was achieved some 128 trading days after breaching 12,000 or about 15 times faster than the previous thousand-point advance.
The broader S&P 500 rose 0.7 per cent to 1494.07 and ended the week within 2.2 per cent of the all time record close of 1527.46 reached on March 24, 2000.
The tech stock-dominated NASDAQ rose 1.2 per cent to 2557.21, its highest close since February 2001.
