U.S. Indexes Point Higher; Fed Speech May Disappoint Many

Arthi Gupta
22 Aug, 2011
New York City

U.S. indexes rallied ahead of the anticipated speech by Federal Reserve Chairman Ben Bernanke. Bain Capital agreed to acquire Australia-based personal software maker MYOB. Cisco announced its intent to acquire AXIOSS software assets. Australia-based Bow Energy receives $520 million bid.

[R]9:35 AM New York – U.S. indexes rallied ahead of the anticipated speech by Federal Reserve Chairman Ben Bernanke. Bain Capital agreed to acquire Australia-based personal software maker MYOB. Cisco announced its intent to acquire AXIOSS software assets. Australia-based Bow Energy receives $520 million bid.[/R]

U.S. indexes gained ahead of the annual meeting of central bankers in Jackson Hole, Wyoming. The meeting of central bankers is held every year since 1970 and investors are hoping Fed Chairman Ben Bernanke may offer long term solutions to the weak economic growth and persistent banking system problem of “too big to fail.”

Fed has run out of policy options in providing monetary stimulus and has announced near zero interest rate till mid-2013. Bernanke’s misread of the housing market bubble and underestimate of the banking crisis has stoked the unemployment rate to more than 9% and put more than 9 million homes in foreclosure.

European indexes opened higher on the first day of trading this week but leaders in the region offered discordant voices to solve the debt crisis. The euro-zone struggles to contain the debt contagion from spreading to the core nations and banks brace for more losses linked to sovereign bonds.

Oil exploration companies edged higher on the news that NATO led aggression in Libya seized control of Tripoli early on Monday and took two of Colonel Moammar Qadhafi''s sons into custody.

German Chancellor Angela Merkel in an interview to public broadcaster ZDF on Sunday reiterated her stance saying that euro bonds are not a solution to the European debt crisis.

Asian markets fell on global economic concerns.

Bain Capital Buys MYOB

Bain Capital, LLC, the Boston-based agreed to acquire a majority stake in Australia-based MYOB Ltd, an independent software vendor, from a consortium led by Archer Capital and HarbourVest Partners. Financial terms of the transaction were not disclosed.

Bow Energy Receives Shell, PetroChina JV Offer

Bow Energy Ltd., the Australian gas explorer said it received a A$1.48 per share takeover offer from Arrow Energy Holdings Pty Ltd, a joint venture between PetroChina Co. Ltd. and Royal Dutch Shell Plc worth A$520.5 million or $543 million.

Skype Acquires GroupMe

Skype Technologies SA, the Internet communications company agreed to acquire New York-based group messaging service start-up GroupMe. The terms of the deal were not disclosed.

Cisco Plans to Acquire AXIOSS Software Assets

Cisco announced its intent to acquire service fulfillment software assets and associated employees from the UK subsidiary of parent company Comptel Corporation.

The acquisition will enable Cisco to extend network and service management technologies across its next-generation Internet Protocol network platforms and enable service providers to more quickly launch new video, data, mobility and cloud services to their customers.

Earnings Review

Geely Automobile Holdings Ltd.], the Hong Kong-based investment holding company first-half revenue grew 14% to 10.54 billion yuan from 9.23 billion yuan in the same quarter last year. Profit for the period climbed 17% to 937.65 million yuan from 804.85 million yuan in the prior year. On a per share basis, earnings rose to RMB 11.48 cents versus RMB 9.96 cents reported a year earlier.

Illinois Tool Works Inc. ((ITW)), the engineered products manufacturer reported second quarter total operating revenues rose 17% noting that organic or base revenues contributed 6%, acquisitions and currency translation added 4% and 7% respectively.

Lowe''s Companies, Inc. ((LOW)), the home improvement retailer said its board of directors authorized the repurchase of up to $5 billion of its common stock.

Suntech Power Holdings Co., Ltd. ((STP)), the Chinese solar energy company reported second quarter total net revenues soared 32.9% to $830.7 million compared to $625.1 million a year ago. Net loss in the quarter widened 48.4% to $259.5 million or $1.44 per American Depository Share compared to a loss of $174.9 million or $0.97 per ADS a year ago.