Arrow bid, US hopes keep stocks on rise
The Age
Tuesday March 9, 2010
THE sharemarket yesterday rose for a seventh straight day following Shell€™s bid for Arrow Energy, on top of encouraging economic data out of the US.Wall Street climbed more than 1 per cent on Friday on news that unemployment had increased less than expected and that consumer credit was growing.This improved the outlook for global growth, but the trend could be reversed later this week when China announces its latest inflation data. Arab Bank treasury dealer David Scutt said that if the annual inflation figure was any higher than 2.3 per cent, the Chinese government might tighten lending rates.This would lower demand for commodities and drag down the Australian dollar because it would constrain expansion projects, he said.On the other hand, Mr Scutt expects Australia€™s unemployment data, due out on Thursday, to be much better than predicted, and said this would push the Australian dollar higher.€˜€˜Every single time it has been threefold more than the economists have been forecasting,€™€™ he said. €˜€˜If we get another number like that, the dollar will move higher on expectations of further interest rate rises.€™€™The Aussie yesterday climbed US1.03 to US91.10.Shares in energy and basic material companies outperformed the rest of the market.The energy sector rose 3.73 per cent in response to Shell€™s $3.3 billion bid for Arrow Energy. Shares in Arrow leapt $1.63, or 46.8 per cent, to $5.11, compared with the $4.45-a-share bid. But brokers said Arrow was worth $6 a share, and Shell would have to increase the offer to be successful.Energy Resources Australia gained $1.24 to $19.16 and shares in Eastern Star Gas also outperformed, rising 9, or 12.5 per cent, to 81 despite the release of half-year results showing it had lost $3 million due to increased operating costs.The materials index gained 2.1 per cent on demand for BHP Billiton and Rio Tinto. BHP gained $1.01, or 2.4 per cent, to $43.51, the highest closing price since January 15, and Rio gained $1.93, or 2.6 per cent, to $76.94.
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