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Australian stock market and companies daily report (September 10, 2010)

Contributed by Intersuisse

By Intersuisse Research

Market Overview

- US stocks climbed on Thursday, with JP Morgan Chase, Johnson & Johnson and AT&T pacing the broad advance following better-than-expected data on employment and the US trade deficit.

- The Dow Jones Industrial Average rose 0.27%, its sixth increase in the last seven sessions. JP Morgan was the measure's best performer, up 2.5%. The banking giant will repurchase up to $91.3m in auction-rate securities from New

Jersey clients in a settlement with the state attorney general's office. Johnson & Johnson was also strong, up 1.7%. AT&T added 1.5%.

- McDonald's kept the Dow's gains in check. The fast-food giant was the measure's worst performer with a drop of 2.3% after its August same-store sales report didn't quite live up to expectations. The company's global same-store sales

rose 4.9% last month, short of analysts' estimate and July's 7% increase.

- The Nasdaq Composite and the Standard & Poor's 500 index also rose. The gains came after the release of data that US jobless benefit applications fell sharply last week, an optimistic sign for the troubled job market, while airplane

exports helped shrink the trade deficit in July.

- European stock markets rose as data the data showing a decline in US jobless claims relieved some worries over the state of the economy, prompting traders to buy financial and car shares. The Stoxx Europe 600 index advanced

1.05%.

- In Australia, the job market keeps growing, adding 30,900 jobs in August, driving the unemployment rate down to 5.1% and putting the Reserve Bank of Australia on  notice that it may need to resume hiking interest rates soon.

INTERNATIONAL OVERNIGHT NEWS

US stocks climbed on Thursday, with JP Morgan Chase, Johnson & Johnson and AT&T pacing the broad advance following better-than-expected data on employment and the US trade deficit.

The Dow Jones Industrial Average rose 28.23 points (0.27%) to 10,415.24, its sixth increase in the last seven sessions. JP Morgan was the measure's best performer, up 98 cents (2.5%) to $40.10. The banking giant will repurchase up to

$91.3m in auction-rate securities from New Jersey clients in a settlement with the state attorney general's office.

Johnson & Johnson was also strong, up 97 cents (1.7%) to $59.82. AT&T added 42 cents (1.5%) to $27.81.

McDonald's kept the Dow's gains in check. The fast-food giant was the measure's worst performer with a drop of $1.71 (2.3%) to $74.37 after its August same-store sales report didn't quite live up to expectations. The company's global

same-store sales rose 4.9% last month, short of analysts' estimate and July's 7% increase.

The Nasdaq Composite climbed 7.33 (0.33%) to 2,236.20.

The Standard & Poor's 500 index tacked on 5.31 (0.48%) to 1,104.18. The gains came after the release of data that US jobless benefit applications fell sharply last week, an optimistic sign for the troubled job market, while airplane exports

helped shrink the trade deficit in July.

Adobe Systems jumped $3.55 (12%) to $32.86 as Apple's less-than-forthcoming press release about relaxing restrictions put on application developers was seen as a possible indication that it's retreating in its battle against Adobe's flash

technology, used to design Internet sites. Apple eked out a gain of 15 cents (0.1%) to $263.07.

Data-storage company NetApp slipped 10 cents (0.2%) to $46.33, and software company Oracle Corp. edged up 19 cents (0.8%) to $24.33, after the companies agreed to dismiss ongoing patent lawsuits against each other, putting to bed

a battle that had been ongoing since 2007. The terms of the agreement weren't disclosed, and the companies said they are seeking to have the lawsuits dismissed without prejudice.

3M Co. edged up 21 cents (0.3%) to $82.96. The industrial conglomerate said it will pay $810m to buy Arizant Inc., which specialises in products to prevent hypothermia during surgery, from private-equity firm Court Square Capital.

Burger King Holdings tacked on 1 cent (0.04%) to $23.68, after 3G Capital Management Inc. confirmed it plans to appoint former railroad executive Bernardo Hees as the hamburger chain's chief executive once its $3.3bn leveraged

buyout of the company is completed later this year.

US Economic News

In economic news, US jobless benefit applications fell by 27,000 to 451,000 in the week ended Sept. 4, an optimistic sign for the troubled job market, while airplane exports helped shrink the trade deficit in July.

European and Asian Markets

European stock markets rose as data showing a decline in US jobless claims relieved some worries over the state of the economy, prompting traders to buy financial and car shares.

The Stoxx Europe 600 index advanced 1.05% to end at 265.09 points. The US Labor Department reported a drop in weekly jobless claims, underpinning market sentiment.

Investors also got some relief following successful auctions of Irish and Hungarian bonds, coming a day after a wellreceived Portuguese bond auction.

The auto and financial sectors were among the top gainers. In France, the CAC 40 index rose 1.2% to 3,722.15. Shares of PSA Peugeot Citroen advanced 4.6% and those of Renault gained 3.2%.

In Germany, car makers Daimler AG added 2.6% on Xetra, as rival BMW AG also rose after reporting an increase in August car sales. Volkswagen AG advanced 2.5%. The auto sector boosted the German DAX 30 index, which ended up

0.9% at 6,221.52 points.

Banks also helped out Europe. In Germany, Commerzbank rose 2.6% and Deutsche Bank gained 2.1%. In Paris, Credit Agricole and Societe Generale also posted strong gains.

Bucking the positive trend, insurer AXA fell 0.8% after Australia's competition watchdog rejected a takeover bid by National Bank of Australia for AXA Asia Pacific holdings, which is majority owned by the French group.

In London, the Bank of England left interest rates unchanged at 0.5% as expected. The UK FTSE 100 index rose 1.2% to end at 5,494.16 points.

London stocks were boosted by gains for miners and banks, along with a jump for Arm Holdings, which rallied 4% after it unveiled a new processor.

Barclays shot up 5% after several sessions of declines. Shares of Lloyds Banking Group rose 3.3% after analysts upgraded the bank to equal-weight from underweight.

Among mining stocks, Xstrata advanced 3.3% and Vedanta Resources gained 3.4%.

Asian stock markets were mostly higher with exporters and trading houses supporting the Tokyo market, but banks and property developers fell in China on persistent concerns that Beijing would roll out further tightening measures.

Japan's Nikkei Share Average ended 0.8% higher and China's Shanghai Composite Index fell 1.4%, while Hong Kong's Hang Seng Index gained 0.4%.

New Zealand shares closed lower as Telecom New Zealand fell on the back of an announcement on possible partners for developing the NZ$3bn nationwide ultra fast broad band network. The NZX-50 index closed down 0.3%, or 9.41

points, at 3,151.77.

Commodities

Base metals on the London Metal Exchange ended mostly lower on Thursday, with stronger equity markets and upbeat US data unable to pull the complex back into positive territory after its sharp losses in early Asian trade.

Gold futures edged farther from record highs as investors were calmer about the state of the economic recovery and felt less of a need for the metal as a safe haven.

Crude oil reversed course on Thursday, settling in the red as traders balked at pushing oil higher on continued worries about high supplies.

AUSTRALIAN OVERNIGHT NEWS

Australian Markets

Shares are likely to head a little higher given positive news from offshore markets.

Ahead of the local open the September SPI futures were 19 points (0.40%) higher at 4,601.

Companies in the News

AXA APH (AXA), NAB (NAB) and IOOF (IFL)

AXA SA said it is reviewing its Asian strategy after the competition authority opposed Nab’s $13.3bn bid for its AXA APH unit, potentially throwing its growth plans for the region into disarray. "AXA remains fully committed to support the

Australia and New Zealand businesses and will continue to review its options in the context of its growth strategy in Asia," the company said. The Australian Competition and Consumer Commission earlier maintained its April 19 rejection of

what would be the biggest deal in Australia's financial services history, arguing it would crimp competition in the market for supply of retail investment platforms - internet portals that link retail investors with the wide range of investment

products fund management companies provide. ACCC Deputy Chairman Peter Kell said that undertakings proposed by the bank and AXA APH to on sell the target's fledgling investment platform North to IOOF, "do not provide sufficient

certainty that the ACCC's competition concerns will be addressed." AXA weakened 36 cents (6.62%) to $5.08. NAB rose 89 cents (3.72%) to $24.84. IFL fell 9 cents (1.35%) to $6.56.

Santos (STO)

Santos said that it has sold 15% of a proposed liquefied natural gas joint venture in Queensland to Total SA for $650m, giving the French oil giant a foothold in its second Australian gas export project. Total has also bought 5% of the joint

venture from Petronas for about $217m, giving it a 20% stake altogether and adding to Total's 24% stake in the Ichthys LNG project, which it is building in the Northern Territory in a joint venture with Japan's Inpex Corp. Santos said it's still

talking to Asian LNG buyers, including Kogas, about selling them LNG from the project and potentially more project equity. Total has agreed to take 1.5m tonnes a year of LNG for 20 years from 2014. Santos, which now has a 45% stake in

the project, said Petronas has also agreed to offtake 3.5m tonnes a year, up from an original 2m tonnes. STP advanced 5 cents (2.38%) to $2.15.

Virgin Blue (VBA)

Virgin said that it will work with the US Department of Transportation over the coming two weeks to address the Obama administration's concerns over its planned tie-up with Delta Air Lines on flights between Australia and the US. The US

transport department said that it proposed to deny an application for antitrust immunity that would have allowed an alliance between Delta and Virgin Blue's V Australia international arm to cooperate on pricing, revenue management and

marketing on trans-Pacific routes. The agency said the carriers hadn't demonstrated that the proposed alliance would produce sufficient public benefits, such as lower fares and increased capacity, to justify an exemption from US antitrust

laws. "Both airlines will be working with DOT over the next 14 day period to respond to the concerns raised," Virgin said. "Virgin Blue strongly believes the proposed alliance with Delta will be good for consumers."

The decision is at odds with the Australian competition watchdog's approval of the planned tie-up in December and is a major blow for Virgin in its quest to take market share on the lucrative Australia-US route from its bigger Australian

rival, Qantas. The ACCC's Chairman Graeme Samuel said in December that the tie-up was "likely to assist Virgin and Delta to compete more effectively against the incumbents on the routes - Qantas and United Airlines". The ACCC

declined to comment on the decision. VBA fell 2 cents (3.37%) to $0.43.

Aevum (AVE) and with FKP Property (FKP)

Aevum said that it has held talks with FKP about a possible merger with FKP's listed unit Forest Place as it looks at alternatives to the $266.4m bid from Stockland that it rejected. Aevum said one potential structure under consideration

would see a stock merger at net tangible backing of $2.66 a share for Forest Place and $2.02 for Aevum. "There has been no agreement on these parameters," Aevum said. It said it is in confidential talks with a number of other parties

about alternative options, but cautioned there was no certainty any deal would arise. FKP confirmed the early, confidential talks. AVE rose 3 cents(1.7%) to $1.79. FKP increased 1 cent (0.63%) to $0.80.

Australian Economic News

Job Market Grows

The job market keeps growing, adding 30,900 jobs in August, driving the unemployment rate down to 5.1% and putting the Reserve Bank of Australia on notice that it may need to resume hiking interest rates soon. A total of 350,000 new

jobs have been created in the past year despite the grim global backdrop, providing a clear line of separation between Australia and northern hemisphere economies that are still struggling to get back on their feet after the global

downturn. Full-time workers made up the bulk of the employment gains, rising 53,100. The number of part-time workers fell by 22,100, continuing a trend of workers moving into full-time jobs. Unemployment fell from 5.3% in July, sweeping

aside concerns that job creation was about to stall. Aggregate monthly hours worked rose 0.9%, the Australian Bureau of Statistics said.