We are on the verge of entering another wave of quarterly corporate reporting, with aluminium producer Alcoa set to announce its figures after the market close on Wednesday.
By Peter Martin
Tuesday, April 7, 2015
One of the issues that US multinationals will be dealing with is the strength of the dollar: overseas earnings being constrained by unfavourable conversion rates back into the domestic currency could prove to be a common theme.
Today's news that Dow Jones-component FedEX is to acquire Dutch rival TNT Express highlights one upside to the current dollar strength: the potential for US companies to flex their muscle in Europe with acquisitions. FedEx announced it will pay €8 per share for TNT, in a conditional agreement that values the company at €4.4 billion ($4.8 billion). Shares in TNT have rocketed 30% on the back of the news today, rising to €7.79 per share.
The M&A news has added to a general sense of increased risk appetite that has been engendered by the growing expectation the Fed will refrain from introducing a rate rise until later in the year. That helped stocks rise sharply in Europe before the opening of the US market: the German DAX gained 1.26% to 12,117, while the UK's FTSE 100 rose 1.48% and the French CAC jumped 1.67%.
Price movements on Wall Street have also been positive, though more slight. Shortly after the opening, the Dow Jones was up 52 points or 0.29%, while the S&P 500 Index gained 0.25% to 2085.8.
In the Forex market, the Australian dollar made strong gains, rising more than 1% against the US dollar at one point earlier in the trading session, after the Reserve Bank of Australia surprised the market by choosing not to implement a rate cut at its latest monetary policy meeting. The RBA kept its benchmark cash rate at 2.25%, while the consensus estimate had been for a reduction to 2.00%. The central bank acknowledged in its statement that Australian growth has been below trend and unemployment has been rising and said that further easing 'may be appropriate over the period ahead' in order to foster growth. AUD/USD was up 0.77% at 0.7650 by 09.30 in New York.
US macroeconomic news has been thin today, but Wednesday's release of the minutes from the last FOMC meeting and crude oil inventory data from the Energy Department could serve as catalysts to get the market moving.
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.