Global Deal Making Drives Markets on Monday

Bikram Pandey
27 Aug, 2012
New York City

World markets held out the prospect of central bank action and the latest data from China offered another indication of slowing economy. Deal making was in full swing. IBM announced a purchase of human resource services provider and Hertz and Dollar Thrifty Group finally sealed an agreement.

[R]4:00 PM New York – World markets held out the prospect of central bank action and the latest data from China offered another indication of slowing economy. Deal making was in full swing. IBM announced a purchase of human resource services provider and Hertz and Dollar Thrifty Group finally sealed an agreement.[/R]

On a quiet Monday markets in New York lacked direction in thin trading as most traders awaited Fed Chairman Bernanke’s speech later in the week and focused on the latest merger announcements.

Hertz agreed to acquire Dollar Thrifty for $2.3 billion and Deltek agreed to go private in $1.1 billion leveraged buyout. IAC Interactive agreed to acquire About.com from New York Times Company for $300 million, $30 million more than offered by answer.com.

The troubled grocery store retailer Supervalu put itself up for sale and hired financial advisors.

Kenexa Inc ((KNXA)) soared 41% to $45.86 after the human resource services provider agreed to be acquired by International Business Machine Corp ((IBM)) for $1.3 billion.

Australia based largest mining company BHP agreed to sell the largest undeveloped uranium mine in Western Australia to Cameco for $430 million.

In corporate news, Tiffany lowered fiscal outlook less than expected and comparable same store sales decline was smaller than expected.

A California jury awarded $1 billion to Apple Inc ((AAPL)) in a patent lawsuit against Samsung Electronics Co that may be trimmed on the appeal. However, the verdict delivered by a jury after deliberating for less than three days found Samsung guilty of violating six of the seven patents held by Apple for mobile phones.

Samsung said it will appeal the verdict and the judge is expected to rule on September 20 on the Apple’s request to ban the sale of Samsung’s Galaxy Tab products.

Separately, Google issued a statement and said that the verdict does not affect the core of Android but the company will be forced to design its mobile phone operating system around Apple patents and may face delays in new releases.

Google ((GOOG)) was down 1.3% after several analysts said that the search company will be forced to focus more on its Motorola smartphone unit to bolster its presence in the market as Apple probably will seek aggressive enforcement of other more relevant utility patents.

Separately, Samsung agreed to invest €779 million in the Europe based chip maker ASML Holding NV.

AOL Inc ((AOL)) declared a special cash dividend and $600 million buyback plan. Hertz ((HTZ)) agreed to buy Dollar Thrifty ((DTG)) for $2.3 billion.

The European indexes gained on the optimism that the central bank will soon offer additional stimulus measures. UK home prices fell and German business confidence weakened in August. Euro zone economic activity remained unchanged in July.

Stocks in Tokyo rebounded on the hopes that the central banks in Europe and the U.S. will provide substantial new stimulus measures after political leaders in Europe failed to offer concrete steps in the near term.

China focused companies declined after profit declined 5.4% in July at Chinese industrial companies to 366.8 billion yen, fourth monthly decrease in a row.

Stocks in Sydney traded in a tight range and closed lower as investors focused on international events. Spot gold price increased to a 4-month high.

Commodities, Bonds and Currencies

The yield on 10-year bond declined to 1.64% and on 30-year bond fell to 2.75%.

The U.S. dollar inched higher to $1.2511 to a euro and increased against the Japanese yen to 78.71 yen.

Immediate delivery futures of Texas crude oil decreased 91 cent to $95.24 a barrel and Brent crude fell $1.19 to $112.40, futures of natural gas fell 0.05 cents to $2.65 per mbtu and gasoline price edged up 9.71 cents to 317.57 cents a gallon.

In metals trading, copper decreased 0.90 cents to $3.480 per pound, gold added 70 cents to $1,673.60 per ounce and silver increased 38 cents to $31.04.