Wall Street jumps, Seven West Media to raise capital


US markets ended a six-day losing streak on Friday, with the Dow Jones Industrial Average up 1.6%, the S&P 500 Index  rising 1.7% and the Nasdaq Composite Index  adding 1.5%. Chinese data showed growth had fallen, but the numbers were mostly what analysts had been expecting, and the result buoyed the markets.

European markets also rose, with the UK’s FTSE 100 adding 1.0%, Germany’s DAX jumping 2.2% and Paris’ CAC 40, climbed 1.5%.

The Australian dollar was up against the US dollar, buying 102.4 US cents.

China’s huge appetite for resources looks set to continue, albeit at a slower pace which spurred commodities prices. Gold was up $26.70 to US$1,592 an ounce, and copper and oil both rose.

SPI says up, up and away

The ASX SPI futures was up 31 points, suggesting the S&P / ASX 200 (Index: ^AXJO) (ASX: XJO) could show a nice rise in early trading this morning.

A slew of economic data is due for release this week, with the Australian Bureau of Statistics first cab off the rank with May lending finance data out today. Tomorrow, analysts will be scouring the RBA’s July board minutes for signs of any interest rate cuts to come. Analysts have suggested there’s a 65% chance of a rate cut in August. Here at the Motley Fool, we know better than to predict interest rate movements – but personally, I’d be surprised to see an interest rate cut in August.

The US Federal Reserve’s Ben Bernanke gets his turn on Wednesday, when he gives his semi-annual testimony, with investors hoping to gain further insight into the state of the US recovery.

According to the Australian Financial Review, Seven West Media Ltd (ASX: SWM) is poised to raise $450m from shareholders at $1.30, a very large 20% discount to Friday’s last traded price. In this market, it seems companies have little choice if they want to raise capital, but to offer big discounts to entice shareholders, and keep the underwriters happy.

Several companies have been forced to undertake equity raisings in recent times including Brambles Limited (ASX: BXB), Echo Entertainment Group Ltd (ASX: EGP), Billabong International Limited (ASX: BBG) and Ten Network Holdings Limited (ASX: TEN). All these companies have significant amounts of debt, and have been forced to raise equity to shore up their balance sheets. This comes as a timely reminder to be wary of highly indebted companies.

Foolish Takeaway

A busy weak ahead on the economic front, and quarterly earnings reports from several major US companies including Microsoft, GE, Intel, Johnson & Johnson and Coca-Cola are likely to influence the markets in the next few days. After a few days off, I’m ready to get back into it. Bring on the week, Fools!

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Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned. The Motley Fool‘s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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