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DJ MARKET TALK: Australian Equities Roundup 23/03/2010 09:21AM AEST  

0913 [Dow Jones] S&P/ASX 200 offshore leads bullish, with overnight SPI 200 futures up 26 points, or 0.5%, at 4880.0 after Wall Street brushed off some renewed concern about European sovereign debt, with health care stocks leading gains after U.S. reforms passed the House of Representatives. Wall Street recovered Friday's losses, with DJIA up 0.4% at 10785.89, S&P 500 up 0.5%, Nasdaq up 0.9%. S&P 500 Financials up 0.6% and KBW Bank index up 1.1%. S&P 500 Health Care up 0.6%; S&P 500 Materials up 1.3%, with Alcoa up 0.6%, Freeport up 1.6%, Vale up 0.9%. BHP Billiton (BHP.AU) ADRs at equivalent A$42.87 (based on AUD/USD at 0.9178), vs A$42.59 local close. London-listed BHP up 0.8%, Rio Tinto (RIO.AU) up 1.6%. S&P 500 Energy down 0.3%, though Nymex May Crude futures rose 0.8% to US$81.60. Spot gold fell to US$1,102.1 vs US$1,106.55 this time yesterday. LME copper up 0.2%, zinc down 0.7%, aluminum near flat, nickel down 0.7%. Greek PM said Greece hasn't asked for a bailout, but that the EU must have the tools to deter speculative attacks. Germany's Merkel said EU should consider letting Greece go to the IMF for aid, but reiterated that Greece hasn't requested aid and that the upcoming EU meeting won't decide on aid to Greece. EUR/USD up 0.2% at A$1.3559. S&P/ASX 200 last 4830.2. [email protected])


0907 [Dow Jones] COMMODITY SUMMARY: LME pares early losses as U.S. stock markets rise on positive sentiment from U.S. House approval of health-care reform bill. Spot gold also rebounds after sagging below $1,100/oz support to near 4-week low of $1,092.80; EUR/USD strengthens to $1.3564 up from 3-week low of $1.3463. "It's all sentiment from the stock market," says senior metals broker in London. U.S. health care sector propels U.S. equities higher, investors viewed vote with relief for removing political uncertainties that could affect the economy. LME 3-month copper ends up $13 vs PM kerb at $7,445/ton, aluminum down $3 at $2,255, lead down $33 at $2,162, zinc down $17 at $2,277, nickel down $150 at $22,275, tin down $95 at $17,550. Spot gold recoups much of early losses but traders say gold could sag further, with investors hesitant to buy at current levels in the hope of bargain opportunities. Spot gold trading at $1,103, up 40 cents vs NY close, silver at $16.96, unchanged, platinum at $1,595, down $4, palladium at $454, down $1. Nymex April crude futures up 57 cents at $81.25/bbl. ([email protected])


0903 [Dow Jones] STOCK CALL: Citigroup upgrades AGL Energy (AGK.AU) to Buy from Hold, lifts price target to A$16.60 from A$15.40, says company has been significantly de-risked over last month, partly from amendment to renewable energy target legislation, Loy Yang power station securing 20-year contract with Alcoa. That deal will help AGL sell its interests in Loy Yang once carbon price certainty has been achieved, Citi says. Also estimates AGL's coal seam gas interests, back-in rights in the Bowen Basin worth A$1.2 billion based on Shell, PetroChina bid for Arrow. AGL last at A$14.90. ([email protected])


0902 [Dow Jones] STOCK CALL: Deutsche Bank boosts its target on Ten Network (TEN.AU) to A$1.60 from A$1.40, but keeps its Hold rating on the stock, noting group's share price has risen strongly as investors seek leverage to improving advertising market. "We consider that the current valuation of TEN already reflects a market recovery and a strong ratings share, which is by no means assured given the network's weak start to the ratings year," Deutsche Bank says. Expects group to book 1H EBIT of A$114 million when it reports March 31, up 12% on year. "We also expect management to provide full-year cost guidance and an update on current market conditions." TEN last at A$1.815. ([email protected])


0857 [Dow Jones] AUD/USD being supported by spot iron ore price rising to a fresh high for the year, says John Kyriakopoulos, head of FX strategy at NAB. Adds iron ore price is best litmus test on China growth story. Says AUD lift has also come from comments by a major U.S. fund manager suggesting overnight investors should buy Asia-Pacific bonds rather than European or U.S. debt because of faster growth in the region and less risk of fiscal cutbacks damping economic recovery. Support for AUD/USD is at 0.9085, resistance 0.9243. Latest 0.9183. ([email protected])


0853 [Dow Jones] Murray Goulburn Cooperative late yesterday files substantial shareholder notice, now owns 9.999% of Warrnambool Cheese & Butter (WCB.AU) from 8.37% previously. Murray Goulburn limited by WCB's 10% cap on any single shareholding, although this scheduled to rise to 15% in May. Lifting of stake serves to underscore Murray Goulburn's determination to take over WCB, which remains coy, hasn't yet accepted offer. ([email protected])


0850 [Dow Jones] Small increase in Shell, PetroChina bid for Arrow Energy (AOE.AU) Australian assets reflects lack of bidding tension, with rival offer unlikely to emerge, analysts say. Deutsche Bank increases price target to A$5.55, reflecting A$4.70 cash offer and valuation of Arrow's offshore assets at 83c/share. Credit Suisse expects bid to be successful, maintains A$5.25 price target. Goldman Sachs JBWere says Arrow shares could fall below A$3.00 if bid fails, maintains A$5.10 price target. Deal is subject to shareholder, regulatory approval. Shares last at A$5.10. ([email protected])


0823 [Dow Jones] WALL STREET: Stocks climbed to 17-month highs as relief over the House's late-Sunday vote to approve health-care overhaul bill swept market, lifting hospital operators, drug companies. While bill expected to increase costs for number of companies, it seen as removing big uncertainty weighing on market, health-care stocks in particular. "We're in one of those market environments where the momentum is so positive," said Eric Thorne, senior vice president at Bryn Mawr Trust. Thorne noted while gains in stocks seen as being due to removal of uncertainty of health-care bill, in different psychological environment investors might have reacted differently, instead focusing more on expected costs of bill to corporations. Drug company Pfizer rose 1.4%, Merck +0.6%. Boeing rose 1.2% after Oppenheimer raised rating to outperform. Consol Energy fell 1.9% after coal company announced plans to buy remaining 17% of CNX Gas which rose 23%. Williams-Sonoma jumped 12% as housewares and home-decor retailer's 4Q earnings soared, beating its own forecasts; American International Group fell 4.1%, as former CEO Hank Greenberg's Starr International said would sell up to 10 million shares. UBS fell 1.3%. Citigroup rose 3.6%, after Rochdale's Dick Bove upgraded rating. Dow +0.4%, Nasdaq +0.9%, Philly semicons +2.4%. ([email protected])


0822 [Dow Jones] Australian wheat futures likely supported today after short-covering lifted U.S. wheat futures overnight, although finishing below day's high on lack of conviction among traders ahead of a key government crop report, dearth of news. Chicago Board of Trade May wheat added 2.75 cents, or 0.6%, at US$4.8650/bushel. AUD/USD should limit gains for Australian wheat prices, last 0.9183, after bouncing strongly from 0.9088 overnight. ASX milling wheat deliverable in May in NSW added 50 cents to settle at A$205.00/metric ton. ([email protected])


0811 [Dow Jones] AUD/USD likely firm in early Asia trading after solid rebound overnight off lows around 0.9085. Now 0.9180. Stronger stocks on Wall Street and calming comments on the outlook for Greece by ECB President Jean-Claude Trichet helped to lift pair, says Sean Callow, FX strategist at Westpac. But Asia session likely subdued with data flow particularly thin and local traders focused on RBA speeches later this week. Callow says resistance likely 0.9225 and support at 0.9130. ([email protected])


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