Qantas and not the Federal Budget tomorrow night will overshadow the market today and probably for the next few days while the tension is taken out of the share price.
Investors will be wondering what it means and whether it will damage overall market sentiment.
In contrast the bullishness of the Budget has already been factored in after the Reserve Bank’s good report card last week.
Certainly we have seen big takeover deals fall over in the past: Flight Centre’s attempt to go private with private equity buyers was one instance, while the takeovers for Colorado Group and Pacifica both fell short.
Flight Centre shares late last week regained the $17.20 price in the first offer: now that the private equity buyer is back with another proposal and with improving business conditions, the rejection of the offer by fund manager, Lazards, has been justified.
And with the likes of APN News and Media and Rinker facing shareholder opposition to their buyouts or takeovers, no one can discount those deals falling over.
But after Friday’s finish at yet another record of 6296, up 2.5 per cent, the opening today is going to be considerably less certain.
Leads from overseas from Wall Street and commodity prices won’t be enough to offset the uncertainty the Qantas bid situation has caused.
The US job creation machine closed to its weakest growth rate for more than two years in April: just 88,000 new jobs created, half the 177,000 created in March. The unemployment rate rose to 4.5 per cent from 4.4 per cent.
The Dow Jones closed 23 points higher at 13,264, in its fourth record close in a row. The Dow has now risen in 23 of the last 26 sessions, marking its longest bull run since the summer of 1927, according to US market watchers.
We all know what happened in the autumn of 1929!
The broader S&P 500 rose 3 to 1,505.The S&P 500 is not far from its all-time high of 1527.46 hit reached March 2000 at the end of the great tech boom.
The Nasdaq rose 6 to end at 2,572 a six-year high.
For the week, the Dow rose up about 1.1 per cent, the Nasdaq gained 0.6 per cent and the S&P about 0.8 per cent.
This week will be dominated by the Federal Reserve’s policy statement as well as reports on retail sales and wholesale inflation figures.
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Commodity markets are still in a bit of a disconnect: oil prices fall sharply, copper rises, gold goes down and then up. Nickel bounces to a new record but trying to find a common driver or group of factors is impossible.
This week marks the start of the 2006 speculative peak for many commodities, especially copper, gold and oil. (Copper prices peaked in london on May 11, 2006 for example)
Oil ended up peaking in August of last year at $US78.80 thanks to the Israel-Hezbollah war but on Friday in New York it fell because fears of a shortage of petrol in the US this summer appear over done.
June Crude fell $US1.26, to settle at $US 61.93 a barrel on Friday on Nymex in New York, down 6.8 per cent over the week and 11 per cent lower than this time last year.
It was the biggest weekly fall since the first week of the year.
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In contrast New York copper futures reached their highest price in 11 months.
That was thanks to worries about the strength of US economic growth with factory orders and manufacturing doing better than expected, and rising concerns that miners’ dispute in Peru may spread.
Copper prices have risen 31 per cent so far this year on rising sales into the booming Chinese and Asian markets.
July futures hit $US3.7585/lb on Comex in New York on Friday, the highest close since May 26, 2006. The price rose 6.4 per cent last week.
In London the LME three month copper rose $US65, to $US8,245 a tonne. The metal reached a record $US8,800 last May 11. LME copper rose 7.2 per cent last week.
Calyon, one of the 11 companies that trade on the floor of the LME, has now raised its price forecast for copper 27 per cent to average $US6,920 a tonne this year, LME copper averaged $US6,678 a tonne.
Nickel jumped 10.6 per cent to $US51,550 a tonne this week after hitting a record at $US51,600 Friday, with available stocks still critically low. Calyon also raised its 2007 average nickel price forecast from $US34,580 to $US44,080 and expects prices to average $US50,000 in 2008.
Lead rose 4.3 per cent to $US2,107.50 a tonne and touched a record at $US2,115 Friday. Zinc also rose sharply, advancing 12.6 per cent to $US 4,140 a tonne.
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Gold and silver rose for a second straight day in New York on speculation interest rates in the US will remain steady, weakening the dollar and boosting the appeal of precious metals as an alternate investment.
June gold futures rose $US 5.30 to $US689.70 an ounce on Comex in New York, the highest close since April 23. The metal rose 1.2 per cent this week after dropping to a one-month low of $US670 on May 2.
July silver rose 2 cents to $US13.53 an ounce but was down for the third straight week, cutting the year’s gain to less than 4.5 per cent.
