Shell bid for Arrow Energy helps spur market
Sydney Morning Herald
Tuesday March 9, 2010
THE sharemarket enjoyed a seventh consecutive day of rises yesterday after strong economic data from the United States. It was also boosted by Shell€™s decision to buy an Australian coal-seam gas producer.Wall Street gained more than 1 per cent on Friday on news that unemploymenthad increased less than expected and consumer credit was growing rather than shrinking.This boosted the outlook for global growth on Friday, but the trend could be reversed later this week with China due to announce its latest inflation data.The fastest-growing economy could try and slow down growth if it feels inflation is getting out of hand.If the inflation figure is any higher than 2.3 per cent, the Chinese governmentcould tighten lending rates.This would push demand for commodities and the Australian dollar down because it would constrain expansion projects, an Arab Bank treasury dealer, David Scutt, said.On the other hand, Mr Scutt expects Australia€™s unemployment data to be much better than predicted when it comes out on Thursday, and said this would push theAustralian dollar higher.€˜€˜Every single time it has been threefold more than the economists have been forecasting. If we get another number like that the dollar will move higher on expectations of further interest rate rises,€™€™ he said.Shares in Australian energy and basic material companies yesterdayoutperformedthe rest of the market.The energy sector rose 3.73 per cent after Shell made a $3.3 billion bid for Arrow Energy. Shares rose more than $1.63 to $5.11, a 46.8 per cent rise, after the bid, which would pay $4.45 a share. However, brokers said Arrow was valued at $6 per share, and Shell would have to increase the offer to be successful.Energy Resources Australia rose $1.24 to $19.16 while Eastern Star Gas also outperformed yesterday, rising 9 to 81, or 12.5 per cent, after releasing its half-year results.The company lost $3 million over the accounting period, dragged down by increased operating costs. And the materials index gained 2.1 per cent due to demand forshares in the biggest two companies €“ BHP Billiton and Rio Tinto.BHP rose $1.01 to $43.51, its highest closing price since January 15, and Rio rose $1.93 to $76.94.
© 2010 Sydney Morning Herald