The worldwide recovery of consumer confidence after a small panic of July 10th has recovered the investor appetite for risk, saw carry traders resume their positions and sent the Aussie to fresh highs against the US dollar at 0.8691. The ASX index and the bond yields saw solid gains as well, disrupting the usual negative correlation between equities and fixed income.
Takeover answers the threat from Russia - Rio Tinto?s ongoing negotiations with Alcan with a wide market consensus that the takeover will happen soon will strengthen Rio?s position on the aluminum market. The Rusal of Russia is currently dominating the market after a merge with a Chinese mining company. Australia is the top producer of aluminum in the world, where Alcoa, Alcan, BHP and Rio operate separately. The predicted consolidations (Rio/Alcan and BHP/Alcoa takeovers) should help Australian companies get a strong stance on the global aluminum market. At this time, the companies do not have a competitive edge over its Russian/Chinese partners, who have access to vast cheap energy resources, such as natural gas necessary to refine the aluminum ore. Source: The Australian.
Territory to launch formal bid for ConsMin - Iron ore miner Territory Resources is expected to launch a formal takeover offer to the Consolidated Minerals this coming Monday. After inspecting ConsMin?s data, Territory executives were satisfied with the figures and are anticipated to finish negotiations with the manganese miner over the weekend. The rivaling bid comes from Pallinghurst Resources, which ConsMin continues to back. Source: Herald Sun
Melbourne Airport development to go ahead - Federal government approved a major development of the Melbourne Airport. The parts of development will include shops, a childcare centre, petrol station, supermarket, gym and will occupy 48,000 square meters. Transport minister Mark Vaile stated that putting such use to the land, the federal government is taking pressure off other land stocks available for housing, tackling the growing debate on housing affordability. The project is expected to last five years and to create about 1,100 jobs.
The Aussie reached new highs today, driven by equities, according to analysts. The stellar performance of the ASX and stronger New Zealand retail sales all helped the Australian currency to gain strength. The stronger US dollar and investor confidence increased the appetite of the carry traders to resume their trades. The Aussie reached 0.8691 record high today with little intention to retreat lower.
The ASX saw strong gains today, kicked off by the strong DOW that rallied 2.09%. Strong metal prices and talks of large takeovers in the Australian mining industry were also helping the rally. The largest gainer today was, not surprisingly, BHP Billiton, the price of which reached record levels at A$39.16, or a 1.0% gain. Another winner in today?s market was an insurance company QBE Insurance group, which gained 1.2%. The third biggest index mover was BlueScope Steal Limited, which gained 3.8%. The index rose 26 points to 6389.4.
The bond yield followed the strong global lead and gained about 4 basis points at the open. However, the rallying Aussie put a cap on the rally and the yield lost during the day under the pressure of demand.