Stocks Back To Earth After Early Flight
The Age
Saturday January 29, 2005
ON ITS website, Virgin Blue is quick to boast its mantra: "Keeping the Air Fair". The question of fairness yesterday shifted from airline prices to share prices - the fairness of part-owner Patrick Corp's bid of $1.90 a share.
Judging by the market reaction - Virgin Blue shares jumped 28 ?, or 15.6 per cent, to $2.08 - it would appear most found the offer a bit underwhelming. The takeover bid, coupled with gains by banking and insurance stocks, carried the indices to record highs in early trade. The enthusiasm waned, however, and the market closed with losses. The benchmark S&P/ASX 200 Index finished down 6.8 points at 4098.9 after climbing to 4121, which broke Thursday's intraday record of 4110.4. The All Ordinaries closed shop 4.8 points lower at 4096.4 after an intraday high of 4114.3. "The highlight had to be the takeover," said EL & C Baillieu director Richard Morrow. "The market has been quite warm for a while about the prospect of 2005 being a big year for corporate activity, and that's come out with Virgin Blue. It's something that people are focusing in on - that there is potential here for some movers. "A lot of brokers were talking about the bid, asking that if there is an outbreak of takeover fever, then who's next? I think it's the 'who's next' factor that pushed the Suncorp-Metway price." Suncorp-Metway shot up after the Queensland-based bank upgraded its forecasts for its half-yearly result, closing 66 ?, or 3.6 per cent, higher at $19.06 after hitting a peak of $19.29. "It was a pretty good day in the market, particularly a strong day for insurance companies," said James Foulsham, a senior dealer with CMC Group. QBE put on 15 ? to $15.35 and AMP rose 6 ? to $7.54. Also strong were National Australia Bank, which rose 26 ? to $29.19, Commonwealth, up 23 ? to $33.39, and St George, which jumped 5 ? to $24.85. But Westpac lost 21 ? to $19.11 and ANZ fell 10 ? to $20.55. Telstra was an eye-catcher, putting on 5 ? to $4.97, and SingTel rose 4 ? to $1.99. In the retail sector, Coles Myer was steady at $9.40, Woolworths dropped 7 ? to $14.72, and Harvey Norman shed 4 ? to $2.91. Building materials group Rinker climbed another 35 ? to $11.38. In the resource sector, BHP Billiton dropped 12 ? to $16.26 and Rio Tinto shed 51 ? to $42.68. "There's every possibility that the market will be strong next week," Mr Morrow said. "We will start to see corporate profits being announced to the market, and generally the good ones come out early." The dollar broke through US78 ? to its highest level in more than a month, only to finish slightly weaker. At 5pm it was at US77.53 ?, from US77.63 ? on Thursday. Its spike to US78.03 ? was its highest since mid-December. The initial strength was on a report that a Chinese monetary official had said it was time for the yuan to be revalued.-- With AAPDOLLAR FRI THU $US 77.53 77.63 ?Sterling 41.11 41.24pYen 80.02 80.16Euro 59.49 59.36 ?$NZ 1.0849 1.0835SFR 0.9141 0.9115TWI 63.5 63.5RATES FRI% THU % Target cash rate 5.25 5.25Overnight 5.25 5.2590-day bills 5.44 5.46180-day bills 5.56 5.523-year bonds 5.30 5.2810-year bonds 5.39 5.37
© 2005 The Age