Sharemarket steady, Commonwealth Bank eyes Bankwest, BHP Billiton gets ACCC approval for Rio Tinto bid: Economy roundup

Up one hour, down the next – Australian investors are going through a rollercoaster of emotions at the moment as they eagerly await news about the US Government’s $US700 billion package.

Up one hour, down the next – Australian investors are going through a rollercoaster of emotions at the moment as they eagerly await news about the US Government’s $US700 billion package.

The US senate approved the plan this morning and tomorrow it will go back in front of the US House of Representatives, which rejected the bailout package two days ago.

The suspense is clearly getting to sharemarket players. The benchmark S&P/ASX200 jumped by around 0.7% in early trade before slowly sinking as the investors waited for the outcome of the senate vote. At noon AEST the index was down 22.6 points or 0.5%.

Trading is likely to remain choppy for the rest of the day.

In the US, trading was subdued overnight as investors nervously awaited the result of the US Senate’s vote on the $US 700 billion rescue package. The Dow Jones Industrial Average ended down 0.18%, while the Standard & Poor’s 500 fell 0.45%. The tech-focused Nasdaq Composite Index lost 1.07%.

Despite the fact that bank stocks have been under pressure in the last week as a result of the financial crisis, Commonwealth Bank is trying a spot of bargain hunting, reportedly making a low-ball offer for BankWest, a subsidiary of British banking group HBOS.

HBOS is currently in a mess, with a proposed merger deal with large rival Lloyds TSB seemingly about to fall over. Commonwealth Bank is clearly hoping to exploit HBOS’s weakened position by snatching Bankwest for a bargain-basement price of around $3 billion.

The market is also digesting the news that the Australian Competition and Consumer Commission says it has no concerns about BHP Billiton’s takeover bid for fellow mining giant Rio Tinto.

Analysts say it’s a big win for BHP Billiton. While the Big Australia still needs to win the approval of competition regulators in Europe, the ACCC’s detailed examination of the merger has not revealed any big areas of concern from a competition point of view.

Given that the ACCC’s report on the merger was prepared with the help of other regulators – including those at the European Union – it’s looking more likely that the EU will rubber stamp the deal too.