U.S. Stocks Trade Down; Merger Wave

Nigel Thomas
23 Aug, 2010
New York City

U.S. stocks search for direction and close lower in the final minutes. Merger activities in the U.S., Europe and Asia heat up and lift sentiment in the morning. Nikkei Stock Average in Japan dropped to the low for the year as the yen hover near recent high.

[R]4:00 PM New York – U.S. stocks search for direction and close lower in the final minutes. Merger activities in the U.S., Europe and Asia heat up and lift sentiment in the morning. Nikkei Stock Average in Japan dropped to the low for the year as the yen hover near recent high. Resource tax in Australia rise on the prospect of hung Parliament.[/R]

U.S. stocks trade sideways and decline in the final minutes of trading as mergers acquisitions heat up, the yen climb and oil and commodities fall.

Potash Corp rebuffed BHP''s renewed $130 per share acquisition bid and Sinochem may join the fray. HP agreed to acquire 3PAR for $24 per share. 3PAR soared 40% after Hewlett Packard offered 33% premium to Dell bid.

BHP Billiton and Rio Tinto Group increased after hung Parliament election in Australia raised the prospect of mining tax cancelation. Warner Chilcott added 3% after it announced special dividend.

The European indexes gained on merger and acquisition-related reports and a rise in mining stocks. Bundesbank President Axel Weber noted modest euro area growth revisions. Euro area private sector growth slackened in August. German manufacturing dropped in August.

The UK indexes rose after HSBC agreed to buy a majority stake in Nedbank Group. BP announced open water fishing operations. Verizon Wireless completed the acquisition of Centennial Communications assets.

Stocks in China dropped marginally after trading higher in the morning. India gives clearance to two Chinese telecom companies to supply equipment. Sinopec, the largest refiner said first half net profit increased 6.7%. Everbright Securities plan to sell 12% stake in its asset management joint venture.

The benchmark index Nikkei declined to the low for the year after government did not indicate any steps to stem the recent rise in the yen. Same store sales at supermarkets and convenience stores drop. Itochu Corp helps Indian farmers to shift to organically grown cotton.

Stocks in Mumbai traded sideways. Maruti Suzuki may be forced to limit exports as the domestic market demand surges and the automaker struggles with a market share decline. Foreign investment in real estate projects in India soars 60-fold in the last five years.

Singapore inflation soared to 3.1%.

Stocks in Australia stagnated after election results raised the prospect of a minority government. The ruling party needed support of four independents to form a government. Lihir Gold shareholders back takeover plan by Newcrest Mining.

Commodities, Currencies and Yields

Dollar edged higher against euro to $1.266 and fell against the Japanese yen to 85.16.

Crude oil decreased $0.70 to $73.12 a barrel for a front month contract, natural gas edged lower 5 cents to $4.07 per mBtu and gasoline decreased 4.26 cents to 188.25 cents.

Gold decreased $0.20 in New York trading to close at $1,228.60 per ounce, silver increased $0.02 to $18.06 per ounce and copper for the front month delivery increased 0.10 cents to $3.312 per pound.

Yields on 10-year U.S. bonds decreased to 2.59% and on 30-year U.S. bonds yields decreased 3.65%.