The end of last week saw the Dow Jones Industrial Average setting a new closing record and the momentum has carried on into Monday’s trading, with fresh highs spurred by news of more M&A activity.
By Peter Martin
Monday, May 12, 2014
Pinnacle Foods announced it has entered into an agreement to be sold to Chicago-based food company Hillshire brands in a deal involving cash and stock worth around $4.3 billion, while in the biopharmaceutical sector Botox manufacturer Allergan has pushed back on Valeant Pharmaceutical’s unsolicited offer, saying the $46 billion deal undervalues the company and poses a risk to shareholders, and Dow component Pfizer defended its plans to acquire AstraZeneca in a written submission to a UK parliamentary committee. Pfizer wrote ‘Looming patent expiries and near -term revenue losses jeopardise [AstraZeneca’s] ability to deliver on its very promising pipeline’, but may be forced to come back with an improved offer to smooth out fierce opposition to the deal and to counter a slide in its own share price that has reduced the value of its last offer.
By late morning in New York, the Dow Jones Industrial Average was up 0.59% or 98 points at 16,681, after setting a new intraday record of 16,695.18 earlier in the session. The S&P 500 index, meanwhile, gained 0.81% or 15 points to 1893.6, short of its intraday record by under 4 points, but above its closing record price. The NASDAQ 100 index fared even better, rising well over 1% to 3601.5.
We can look forward to a fairly busy economic calendar this week, with April’s retail sales data released on Tuesday, CPI inflation data on Thursday and a first estimate of consumer sentiment for May on Friday, as well as various housing reports throughout the week, but Monday itself has been sparse on the macroeconomic front. The US Treasury reports on the federal government’s budget balance for April on Monday afternoon, with a surplus of $114 billion expected, which would be a big swing back into the black after a surprisingly large deficit of $36.9 billion in March. Historically April has shown surpluses, with an average surplus of $55.9 billion over the last ten years. The lack of impetus from Monday’s dearth of macro news was reflected in the inertia of the EUR/USD currency pair, which was flat at midday in New York. The British pound has carried on some momentum after its recent gains against the dollar, climbing 0.13% on Monday. The UK has seen a rash of upbeat economic reports lately, and the Bank of England is expected to raise its outlook for the UK economy in its quarterly inflation reports which is due to be released on Wednesday.
Gold has pushed significantly higher today, climbing 0.81% and challenging the $1300 per troy ounce mark, supported by ongoing tensions surrounding the situation in Ukraine, which is boosting demand for safe haven assets. Pro-Russian militants in the east of Ukraine are claiming a union with Russia would be an appropriate step after claiming a controversial referendum showed a large majority voting in favour of ‘self-rule’. Oleksandr Turchynov, the interim President of Ukraine, said, ‘The farce that terrorist separatists call a referendum is nothing more than propaganda to cover up murders, kidnappings, violence and other serious crimes.’
This information has been prepared by Nadex, a trading name of North American Derivatives Exchange, Inc., prepared by independent third parties contracted by Nadex or reproduced form third party news agencies. In addition to the disclaimer below, the material on this page does not contain an offer of, or solicitation for, a transaction in any financial instrument. Nadex accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.