Our market could struggle to find the momentum to build on yesterday’s stellar rally despite positive leads from US and European equities and gains in most commodities last night.
The futures market is forecasting a flat start for the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) and its resource stocks that are likely to outperform as iron ore enjoyed its best gain in three weeks.
Shareholders in Fortescue Metals Group Limited (ASX: FMG) would be relieved to see iron ore jump 2.2% to $US61.34 a tonne as higher cost producers failed to partake in the 1.3% advance in the S&P/ASX 200 Index.
But the positive sentiment won’t only be confined to iron ore miners. The West Texas Intermediate (WTI) oil price rallied 1.3% to $US61.01 a barrel and copper added 1.6% to $US2.61 a pound.
Woodside Petroleum Limited (ASX: WPL) will be in focus for another reason though. The oil & gas major has struck a deal with the Western Australian government to advance the Browse liquefied natural gas project.
But shareholders in energy utilities like Origin Energy Ltd (ASX: ORG) and AGL Energy Ltd (ASX: AGL) won’t be smiling at a new report by Bloomberg that predicts more than half of Australia’s electricity needs will generated by households through solar panels and batteries by 2040.
Flight Centre Travel Group Ltd (ASX: FLT) is likely to face more turbulence today after JPMorgan and Credit Suisse downgraded the stock to “neutral” from a “buy” equivalent rating following the travel agent’s second downgrade in six months.
Gold stocks like Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (NST) may also be under pressure today as gold futures fell for a third consecutive day on growing optimism that Greece will sign a new deal with creditors to keep the country in the European Union.
Other stocks that are likely to fall today include childcare facilities operator G8 Education Ltd (ASX: GEM) as the stock trades without its dividend entitlement, and logistics giant Brambles Limited (ASX; BXB) after Morningstar downgraded it to “hold” from “buy”.
There’s also lots of acquisition news to keep investors busy today. Labour hire companies Skilled Group Ltd. (ASX: SKE) and Programmed Maintenance Services Limited (ASX: PRG) are expected to announce an agreement to merge when they emerge from their trading halt this morning.
The deal values Skilled Group at between $1.70 and $1.75 a share compared with its last closing price of $1.545, according to the Australian Financial Review.
Meanwhile, the federal court has approved the scheme of arrangement that will see Amcom Telecommunications Limited (ASX: AMM) become part of Vocus Communications Limited (ASX: VOC). You can read what my colleague Ryan Newman wrote about the merger here.