A strong rally by US and European stocks is setting our market up for a second day of strong gains as investors eye a surge in the oil price and acquisition deals.
The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is forecast to open 1% higher after yesterday's 1.6% advance and energy stocks like Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could be leading the charge if the oil price is anything to go by.
The West Texas Intermediate crude benchmark surged 5.7% to $US47.15 a barrel on declining US inventories but other commodities failed to follow oil's lead with copper easing 0.6% to $US2.41 a pound and iron ore dipping 0.1% to $US57.21 a tonne.
This doesn't necessarily mean a bad day for Rio Tinto Limited (ASX: RIO) as its US-listed stock jumped 0.8% last night, although that pales to the 3.9% rally by oil-exposed miner BHP Billiton Limited (ASX: BHP), who called for the lifting of US crude export restrictions now that the country is producing more than it needs.
Takeover deals will also be fueling the bulls today. Anheuser-Busch InBev NV announced an audacious plan to buy SABMiller Plc in a deal that could be worth more than $US100 billion ($138.9 billion) and see a number of well-loved Australia beer brands like Fosters swallowed up in the enlarged entity.
If the deal comes to pass, it will be the biggest merger in the history of the industry after more than a decade of consolidation that saw the split in Fosters and the creation of Treasury Wine Estates Ltd (ASX: TWE), which is also under the takeover spotlight.
There's nothing like a mega-merger to fire up animal spirits even if the transaction has no direct impact on the local market.
That isn't the only deal being cut either. News Corp (ASX: NWS) announced that it will cough up to £114 million ($245.8 million) for UK-based online video advertising platform Unruly, while Recall Holdings Ltd (ASX: REC) said it was buying French records management company ARCHE. No financial details were provided and Recall is under a takeover offer itself from Iron Mountain.
Meanwhile, personal care products maker Asaleo Care Ltd (ASX: AHY) could come under pressure on news that its chief executive Peter Diplaris has sold 1.2 million shares in the company. Insider transactions like this tend to make investors nervous.
Luxury goods retailer OrotonGroup Limited (ASX: ORL) will also be in focus as the company is expected to report its full year results today.
Finally, this is the last day to buy embattled law firm Slater & Gordon Limited (ASX: SGH) for its 5.5 cents a share dividend as the stock trades without its dividend entitlement on Friday. The dividend is 40% franked.
