The Australian share market is expected to open slightly firmer as it takes its cue from positive offshore leads on Friday.
Traders are pricing the S&P/ASX 200 Index (Index:^AXJO) (ASX: XJO) to trade at 5,984 this morning, indicating a gain of 0.25%.
Resources stocks will be in focus today for a number of reasons. Gold staged its first gain in four days in New York as it gained 0.9% to $US1,204.60 an ounce, while iron ore prices fell 81 cents to $US47.53 a tonne, according to prices from the Metal Bulletin.
Credit rating agency Fitch warns that the Chinese government's move to support the iron ore industry in that country will only prolong the global glut.
Atlas Iron Limited (ASX: AGO) is the first casualty of significance from the depressed iron ore market and its fate is in the hand of its bankers who will decide if the miner should be wound up.
The stock has been in voluntary suspension since April 7 as the company reviews its operations. Shareholders are unlikely to get much or anything back and investors are bracing for more miners going under.
Meanwhile, Fortescue Metals Group Limited (ASX: FMG) is holding steadfast in its resolve to stare down the iron ore crisis. Management told the Australian Financial Review that it is determined to keep output of the steel-making ingredient at 165 million tonnes a year.
Brokers have also made a number of recommendation changes to the resources sector. Beach Energy Ltd (ASX: BPT) was downgraded to "sell" from "hold" and Drillsearch Energy Limited (ASX: DLS) has been cut to "hold" from "buy" by Canaccord Genuity after Drillsearch's 45% surge since the start of the year.
On the flipside, gold and base miner Independence Group NL (ASX: IGO) has been upgraded to "outperform" by Credit Suisse and Oil Search Limited (ASX: OSH) is likely to catch the attention of the market with two brokers highlighting its takeover potential.
Bernstein lists Oil Search as a potential takeover target as it believes that the global merger and acquisition (M&A) cycle has only just begun following Royal Dutch Shell's $US46 billion bid for BG Gas. This follows a report by Macquarie that Oil Search is the most likely takeover target in Australia.
Investors who have caught the M&A bug will also be watching the media space with Bruce Gordon buying 20 million shares in Nine Entertainment Co Holdings Ltd (ASX: NEC) in a deal worth around $40 million.
This equates to around a 2% stake in Nine Entertainment and Gordon is the largest shareholder in free-to-air television company Ten Network Holdings Limited (ASX: TEN).
