The Aussie Retraces Slightly, Capital Markets are Quiet

While the Dow continued its rally yesterday, the Australian markets did not follow the global lead. The currency market is expecting the results of the upcoming economic releases to decide its next move, while the capital markets are watching the Dow nearing the psychological 14000 level and waiting for its next move. The analysts also note that the fate of the US dollar and the investor sentiment will largely depend on Bernake?s semi-annual report due later this week.

[B]BHP mulls $57bn Alcoa bid[/B] - The pressure around the huge takeover is increasing. Over the weekend the speculation intensified, and media now reports that BHP is expected to decide within two weeks whether to bid for the aluminum giant. The aluminum prices cooled off this year from to $2800 a tonne from last year?s high of $3200 a tonne due to aggressive actions of the Rusal and the Aluminium Corp of China, delivering cheaper aluminum to the market. The Alcoa?s shares are viewed as underperforming by its hedge fund investors, who are now demanding a meeting with the company execs to force company into a deal. Source: The Australian,25197,22079671-5005200,00.html
[B]Cemex completes takeover of Rinker[/B] - At 7 PM last night 95.62 percent of outstanding shareholders of Rinker Group, an Australian building materials maker, had accepted Cemex?s $15.85 per share offer. Cemex, the worlds? third largest cement maker has triumphantly acquired more than 90% of Rinker. Source: Herald Sun,21985,22088438-5012062,00.html
[B]Cape Lambert sale approved[/B] - An overwhelming majority of Lambert Iron Ore shareholders have approved a $250 million sale of the 70% stake of the Cape Lambert magnetite project to Chinese Best Decade. The project, according to Cape Lambert, has the potential to produce 15 million tonnes a year, starting in 2009, costing about $A600 million to develop. Magnetite is a low-grade iron ore that requires intensive processing before it can be shipped to customers. Source: The Australian,25197,22084508-5005200,00.html

The Aussie slowed down today, as the market started to look for the economic releases for further direction. The only release printed today was the preliminary BoP imports, which printed 1.0% against the previous 3.0%. The Australian currency strengthened shortly after the release. The pair is once again dependent on the upcoming US releases and the Fed?s Bernake?s statement due later this week.

[B][U]Stock Market[/U][/B]
The ASX followed the positive US lead shortly after the open, but did not hold that position for long. While the banking stocks rose, led by National Australia Bank and Commonwealth Bank of Australia, the energy stocks, such as Woodside Petroleum and Santos Ltd. dipped after gasoline prices posted their largest drop since October. Overall, the index remained almost flat throughout the day, ending mere 0.8 points higher at 6381.60.

[U][B]Bond Market
The bond yield remained mostly flat throughout the day as the economic calendar was empty and the carry traders remained quiet. A unit of Commonwealth Bank of Australia, Colonial Finance Ltd. sold A$150 million of five-year bonds today. However, the sale did not appear to have any effect on the 10-year yield. It dipped mere 0.4 bps today, closing at 6.176%.