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Morning market movers: 11 stocks to watch

Don’t expect another stellar day for the market as a slump in commodities is offsetting gains in US and European equities.

The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is expected to take a breather with the futures market pointing to a 0.2% dip in the index this morning following its 1.4% rally yesterday.

Iron ore stocks like Fortescue Metals Group Limited (ASX: FMG) may buck the trend though as the price of the steel making commodity inched up 0.3% to a five-month high of $US65.61 a tonne even as most of the rest of the commodities recorded losses overnight.

But iron ore giant Rio Tinto Limited (ASX: RIO) may be weighed down by a possible $300 million write-down after uranium miner Energy Resources of Australia Limited (ASX: ERA) shelved plans to expand its Ranger 3 mine in the wake of weak uranium prices.

Rio Tinto is a majority shareholder in Energy Resources and if the stocks fall in early trade they are likely to be in good company as most resources stocks will be feeling the heat from weaker commodity prices.

Copper took a 2.8% tumble to $US2.67 a pound on rising stockpiles while the West Texas Intermediate (WTI) oil price shed 1.1% to $US60.77 a barrel and gold broke a three-day rise to fall 0.5% to $US1,180 an ounce.

Coincidentally, The Australian reports that BHP Billiton Limited (ASX: BHP) is keen to expand its Olympic Dam copper mine in South Australia.

But it’s not all bad news. The property sector could attract buying interest after JPMorgan upgraded its recommendation on Abacus Property Group (ASX: ABP) to “neutral” from “underweight” after the stock lost 12.6% of its value in four months.

A report in the Australian Financial Review that Shopping Centres Australasia Property Group Re Limited (ASX: SCP) is upsizing its capital raising to $80 million also bodes well for the sector as it shows good investor appetite despite the outperformance of property stocks. You can read more about the capital raising here.

The AFR also reports that insurance giant Allianz has taken a $150 million stake in commercial property company Charter Hall Group (ASX: CHC).

Despite the challenging outlook for engineering contractors, Downer EDI Limited (ASX: DOW) has managed to raise cash in the US private placement market with the issue of two tranches of 10-year unsecured notes for $US100 million and $30 million.

Meanwhile, fellow construction engineer Cimic Group Ltd (ASX: CIM) is selling its development site in St Leonards, NSW, to Mirvac Group (ASX: MGR) for $121 million to strengthen its balance sheet.

Investors will also be watching the changing of the guard at News Corp (ASX: NWS) with Rupert Murdoch reported to be handing over the chief executive role at 21st Century Fox to his son Lachlan Murdoch.

In acquisition news, investment company Equity Trustees Ltd (ASX: EQT) got the formal snub from Diversa Limited (ASX: DVA) with the latter stating it is breaking off negotiations with Equity Trustees, which had put in a non-binding bid for Diversa in April.

I suspect we have not heard the last of this saga as the investment management sector is a hotbed for merger and acquisition activity given the importance of scale to these businesses.

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Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited, Downer EDI Limited, and Rio Tinto Ltd.. Follow me on Twitter - https://twitter.com/brenlau

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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