Australian stocks are riding high with our market poised to close the week on another high note thanks to a rally on Wall Street and a surge in the price of oil and iron ore.
The futures market is pointing to a 1.3% uplift for the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) this morning and if the gains hold it will mean our market would have advanced every day this week.
That's a pretty bullish sentiment indicator that will draw wary investors back into the market and we can tip our hats to the US Federal Reserve for that.
The dovish minutes from the US central bank meeting signaling that it is in no rush to raise interest rates when it decided to keep rates at a record low near zero sent US equities higher and the greenback lower.
This in turn sparked a 3.8% surge in the West Texas Intermediate oil price to $US49.63 a barrel, as iron ore staged its best one-day gain of 5.3% since July 9 to $US55.97 a tonne as Chinese traders returned from their week-long holiday.
This will be a bright day for energy stocks and it's not only a weaker US currency that's supporting the oil rally. There are also signs that that energy demand is being stimulated by the low commodity prices.
But Santos Ltd (ASX: STO) could come under additional scrutiny today after the Australian Financial Review reported that the company is deprioritising the sale of its Asian assets, which could imply it is leading towards selling the jewel in its crown – its stake in the PNG LNG project.
BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO) will also be in the spotlight after Jefferies recommended they cut their dividends and use the cash to buy assets from distressed rivals.
I think investors will be willing to accept lower dividends if the miners can show strong earnings per share accretion from any acquisition.
Meanwhile, investors will be eyeing investment bank Macquarie Group Ltd (ASX: MQG) as it emerges from a trading halt to undertake a share placement to fund the acquisition of Australia and New Zealand Banking Group's (ASX: ANZ) auto financing business.
Coincidentally, ANZ Bank said it has noticed a pickup in demand for loans from small businesses, which bodes well for its bottom line AND the Australian economy. Small businesses are the nation's largest employers and increasing demand for funding shows they are finally feeling confident enough to inevest and grow their operations.
New shares in the placement were sold at $80 a pop, which is a premium to the stock's last closing price. I expect Macquarie's share price to rise in response to the news and to its bullish outlook statement.
In other deal making news, intellectual property services company IPH Ltd (ASX: IPH) announced that it will acquire patent and trade mark law firm Callinans for $11.5 million.
Telecommunications giant Telstra Corporation Ltd (ASX: TLS) will also come into focus after the competition watchdog decided to cut access fees rivals pay Telstra to access its copper line by 9.4%. This is a little better than the initial draft decision for a 9.6% cut.
