RIO scraps Chinalco deal
June 5th, 2009 by Cale McCulloch
Closing Data
| current | change | % | |
|---|---|---|---|
| Dow Jones | 8750.24 | 74.96 | 0.9% |
| NASDAQ | 1850.02 | 24.1 | 1.3% |
| S P 500 | 942.46 | 10.7 | 1.1% |
| FTSE 100 | 4386.94 | 3.52 | 0.1% |
| Nikkei 225 | 9668.96 | -72.71 | -0.7% |
| SPI Futures | 3997 | 48 | 1.2% |
| All Ords | 3,933.00 | -76.8 | -1.9% |
| Oil | 68.8 | 2.66 | 4.0% |
| Gold | 982.3 | 16.7 | 1.7% |
| Silver | 15.895 | 0.585 | 3.8% |
| Aluminium | 1442 | -1 | -0.1% |
| Copper | 4870 | -81.5 | -1.6% |
| Lead | 1565.5 | -47 | -2.9% |
| Nickel | 13805 | -455 | -3.2% |
| Tin | 14650 | -190 | -1.3% |
| Zinc | 1505 | -30 | -2.0% |
The Dow Jones Industrial Average traded up 74.96 pts or .86% on a bounce back for the financial sector and renewed buying in energy and materials stocks. Investors were largely looking ahead to jobs numbers due Friday that may either add new fuel to the market's recent rally or throw it into a speedy reverse. Rally hopes were helped by surprisingly strong data on jobless claims and productivity in the U.S. economy.
A return to buying in the Base metals and commodities overnight, should support the Australian Market this morning. BHP is likely to be flat, while Oil Stocks Woodside and Oil search should be strong on the back of a 4% climb in the price of oil. Gold was also stronger, keeping the inflation trade intact as the precious metal put on some USD 16.70 per ounce to close above USD 980 an ounce.
The Big story is, of course, the ongoing speculation that RIO will need an alternative solution for recapitalisation, following investor outrage over the planned 19.5 Billion dollar investment by Chinalco. Sources believe that the RIO board has signed off on a rights issue over night, and as such may request a trading halt this morning, giving the bankers the long weekend in Australia to hit the market with what looks set to be the biggest capital raising of ASX history. The Stock fell some 6.5% in London, on concerns about the discount factor that would come with the raising, expected to be somewhere in the vicinity of 40%. Rio Tinto last traded at $66.90 per share domestically.
Look for a relatively flat day on the local market, with strength in commodities likely to be the bright spot, but remember it is a long weekend and uncertainty about the state of global economies, and the basis of that recovery itself may bring some selling this afternoon. The SPI has us opening some 10 points higher.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
Disclaimer
The material in “Market Fox” (newsletter) is of a general nature only and neither purports nor is intended to be regarded as advice. No consideration has been given or will be given to your investment objectives, financial situation or needs. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk. Not all risks can be or will be explained in the newsletter. Previous results are no indication of future results. Actual results achieved in the market can vary considerably. The Directors and Representatives of Freeman Fox Ltd and their associates may hold securities in the companies presented.
The research made available in this newsletter is for your private use only and it is protected by applicable copyright laws and other applicable intellectual property right laws. You may not reproduce, distribute, disseminate, broadcast, sell, publish, circulate or give for free, any of the materials made available to you in this newsletter without first seeking the prior written consent of Freeman Fox Ltd.
Freeman Fox Ltd is not required to update any of the content made available in this newsletter, including but not limited to any research commentary, forecasts, recommendations or other analysis in this newsletter. Therefore, for the avoidance of any doubt, material made available in this newsletter may not be accurate after the date of publication or the date on which it is displayed in the newsletter.
To the extent permitted by law, Freeman Fox Ltd and their respective directors, officers, employees, contractors and agents disclaim all responsibility to you for any loss, liability, claim, expense (including but not limited to legal costs and resultant defence or settlement costs) or damage whatsoever, whether direct, consequential, special, incidental, punitive or indirect (including but not limited to loss of profits, trading losses and damages that result from delay, loss or inconvenience) arising out of or in connection with the content of the newsletter and/or any omissions from the content whether in contract, tort (including negligence), statute or otherwise and even if Freeman Fox Ltd has been advised of the possibility of such damage or loss.
If you require assistance in relation to your personal investment situation, contact an authorised representative of Freeman Fox Ltd.