U.S., World Markets Down on Italian Debt Fears, Chinese Inflation

Arthi Gupta
11 Jul, 2011
New York City

U.S. indexes dropped 1% on the euro-zone debt contagion fears. Italy is the latest focus. Precision Castparts agreed to acquire Primus International for $900 million. Peabody and ArcelorMittal confirmed joint bid for Australia-based Macarthur Coal for $5 billion.

[R]9:45 AM New York – U.S. indexes dropped 1% on the euro-zone debt contagion fears. Italy is the latest focus. Precision Castparts agreed to acquire Primus International for $900 million. Peabody and ArcelorMittal confirmed joint bid for Australia-based Macarthur Coal for $5 billion.[/R]

The U.S. markets indexes traded lower 1% after European markets declined and Asian markets sold-off.

Alcoa Inc. is scheduled to kick-off the second quarter earnings season today and 1,000 largest companies are expected to show a decline in earnings growth from a year ago of between 6% and 7% according to the research team of 123jump.com.

Most Asian markets slumped after China's annual inflation soared to 6.4%, the fastest growth in three years fueled by surging food prices. Separately, Chinese trade surplus rose to $22.3 billion in June, from $13.1 billion in May.

European markets across the region turned lower as sovereign debt fears spread to Italy. The focus on Italian bonds intensified after Italian market and banks declined sharply on Friday.

Bond yields of Spain, Portugal and Italy rose for the second day in a row as Italian finance minister was questioned in the latest corruption scandal.

The emergency meeting of ministers is expected to lead to an increase in euro-zone bailout fund to 1.5 trillion euro or $2.1 trillion according to an article in German newspaper Die Welt.

European Union President Herman van Rompuy and European Commission President Manuel Barroso are in talks with European Central Bank President Jean Claude Trichet and with Luxembourg Prime Minister Jean-Claude Juncker and European Economic Commissioner Olli Rehn in Brussels.

Nestle Buys Stake in Hsu Fu Chi

Nestlé SA, the food and nutrition company agreed to buy a 60% stake in Chinese snack and candy maker Hsu Fu Chi International Ltd. for about S$2.1 billion or $1.72 billion.

Nestle offered S$4.35 in cash for each share of Singapore-listed Hsu Fu Chi, an 8.8% premium over the stock’s closing price on Friday.

The controlling Hsu family will own 40% of Hsu Fu Chi after the acquisition and the company will be delisted from the Singapore exchange.

Precision Castparts Acquires Primus International

Precision Castparts Corp., the metal components and products maker agreed to acquire aerospace component supplier Primus International from private equity firm Oak Hill Capital Partners for $900 million in cash.

VCA Antech Purchases MediMedia Animal Health

VCA Antech, Inc., an animal healthcare company agreed to acquire MediMedia Animal Health, LLC or Vetstreet, the provider of online communications, professional education and marketing solutions to the veterinary community for $146 million in cash.

SRA International Wins Contract

SRA International, Inc., a provider of technology and strategic consulting services and solutions to government organizations is one of the awardees on the Department of Veterans Affairs’ Transformation Twenty-One Total Technology program.

The indefinite delivery, indefinite quantity, multiple-award task order contract has a five-year base period, with a ceiling of $12 billion.

j2 Global Closes Two European Acquisitions

j2 Global Communications, Inc., the provider of cloud-based services for businesses acquired Data Haven Limited, an Ireland-based provider of online data backup services for businesses, and the virtual PBX business of Buzz Networks Limited, a UK-based provider of voice services.

Terms of the acquisitions were not disclosed.

Peabody and ArcelorMittal Bid for Macarthur

Peabody Energy Corp. and ArcelorMittal SA confirmed an indicative proposal to buy Australian coal producer Macarthur Coal Ltd. for A$15.50 per share valuing the company at A$4.7 billion or about $5.02 billion.

ArcelorMittal holds approximately 16% stake in Macarthur and Peabody in the last two years have made several proposal to acquire the company between $15 and $16 a share.

Earnings Review

CHS Inc. ((CHSCP)), the integrated agricultural company reported third quarter revenues surged 59% to $10.5 billion, from $6.6 billion a year ago. Net income in the quarter rose 147% to $358.5 million from $145.4 million in the year ago quarter.