World Markets on Hold, More Mergers

Bikram Pandey
29 Aug, 2012
New York City

World markets were in a holding pattern ahead of central bankers gathering. Corporate deal making was in full swing after Japan based air-conditioner maker agreed to acquire the U.S. based Goodman Global for $3.7 billion. Oil futures fell as Hurricane Isaac misses oil platforms.

[R]4:00 PM New York – World markets were in a holding pattern ahead of central bankers gathering. Corporate deal making was in full swing after Japan based air-conditioner maker agreed to acquire the U.S. based Goodman Global for $3.7 billion. Oil futures fell as Hurricane Isaac misses oil platforms.[/R]

U.S. indexes advanced after gross domestic product was revised slightly higher in the second quarter and investors awaited comments from the Fed Chairman Ben Bernanke later in the week.

World markets have been in a holding pattern for the last five days as the earnings season winds down and investors look to central bankers to follow through their latest announcements.

In corporate news, Japan-based Daikin agreed to acquire Goodman Global for $3.7 billion and Schnitzer Steel planned to slash 300 Jobs.

Genesco swung to profit and lifted fiscal outlook and Heinz first quarter net jumped 14% to $258 million. Joy Global, the mining equipment maker said sales increased but it lowered fiscal outlook. Fresh Market, the gourmet grocery retailer said second quarter net surged 27%.

The online review site Yelp Inc ((YELP)) soared 22% on a day nearly 53 million shares were released for trading from the lock up imposed at the time of initial public offering. The shares held by chairman and chief executive are part of the newly available shares for trading that will increase the number of available shares for trading by seven times.

The stock soared after it had fallen 33% in the last two weeks of trading ahead of the lock up expiry in anticipation of the decline. Generally stock declines when more shares are released from the lockup.

Wellpoint Inc ((WLP)) increased 7% after the insurer forced out its chairman and chief executive on shareholder discontent.

European Markets Ignore Improving Economic Data

The European indexes trended lower and the latest batch of economic data offered slightly better outlook.

German consumer price inflation rose more-than-anticipated, French business confidence and Swiss leading indicator gained in August. Italian retail sales rose in June. Danish economy shrunk more than estimated in the second quarter.

Italy raised €9 billion in a bond auction at a lower yield. Syngenta agreed to acquire the DuPont Professional Products insecticide business for $125 million. The hotel operator Accor SA declined after it swung to a loss in the first half and cosmetic maker L’Oreal reported sales and net income in the first half rose more than 10%.

The UK indexes tracked lower following weak European markets. The average home prices in England and Wales rose 0.3% in July. Ryanair planned to re-bid for Aer Lingus. Antofagasta first-half group revenue rose 3.5%.

Asian Markets Worry Falling Exports

Stocks in Tokyo gained ahead of the world central bankers gathering at the end of this week in Jackson Hole, Wyoming. For each of the last two years, Fed Chairman Bernanke had used the opportunity to offer more stimulus measures.

In Japanese corporate news, Renesas Electronics soared 35% on the news that a U.S. based private equity firm KKR is expected to invest $1.3 billion. Sharp gained on employee buyout plan. Ito En, the beverage maker plans to buyback shares.

Australian market indexes were flat as commodities price declined. Grocery wholesaler Metcash signed a $655 million deal to distribute liquor with 1,700 stores. WorleyParsons gained after higher core earnings and Transfield chief executive resigned on several profit downgrades.

Commodities, Bonds and Currencies

The yield on 10-year bond increased to 1.66% and on 30-year bond added to 2.77%.

The U.S. dollar inched lower to $1.2571 to a euro and decreased against the Japanese yen to 78.71 yen.

Immediate delivery futures of Texas crude oil decreased 83 cent to $95.66 a barrel and Brent crude increased 2 cents to $112.60, futures of natural gas rose 0.02 cents to $2.63 per mbtu and gasoline price edged down 2.16 cents to 310.45 cents a gallon.

In metals trading, copper decreased 2.25 cents to $3.44 per pound, gold fell $7.60 to $1,661.90 per ounce and silver decreased 11 cents to $30.84.