EADS and BAE in Merger Talks, World Markets Calm

Bikram Pandey
12 Sep, 2012
New York City

U.S. market indexes closed flat. Apple Inc released thinner and lighter iPhone that will operate on the fastest networks. The parent of Airbus and UK based BAE Systems are in merger talks. Two leading parties in Holland are struggling to gain a ruling majority.

[R]4:10 PM New York – U.S. market indexes closed flat. Apple Inc released thinner and lighter iPhone that will operate on the fastest networks. The parent of Airbus and UK based BAE Systems are in merger talks. Two leading parties in Holland are struggling to gain a ruling majority.[/R]

Stock indexes in New York closed nearly flat after listless trading ahead of the Fed announcement tomorrow.

Market indexes opened higher in the morning after the Germany’s Federal Constitutional Court ruled in favor of setting up the euro zone bailout fund. The endorsement from the court will expedite the formation of the bailout fund that will effectively function as the European International Monetary Fund.

Investors stayed on the sidelines ahead of the Fed announcement tomorrow that may offer another round of monetary stimulus.

In corporate news, Apple Inc gained as much as 1.2% before closing down 0.3% after it released its latest version of iPhone with bigger screen and a faster chip and the phone will operate on fastest communication network available. The phone is priced between $199 and $399 and is expected to intensify competition in a crowded marketplace.

Chesapeake Energy sells its assets to Shell and Chevron for $6.9 billion. Globecomm lowered fiscal outlook. Mediware agreed to go private. PMFG net swung to loss. Texas Instruments lowered third quarter guidance.

The parent of Airbus, European Aeronautic, Defence & Space Co and UK based BAE Systems said they are considering a merger of two companies. EADS will control 60% of the combined company.

The merged company will have 220 employees and revenues of close to $90 billion and will exceed $69 billion revenues at Boeing. BAE dominated European defense sector and the EADS controls commercial plane maker Airbus that rivals with the U.S. based Boeing.

The European indexes gained after a German court ratified the European Stability Mechanism. Italy raised €12 billion in bond auction at lower borrowing costs. Spanish inflation rose and Industrial production in the euro area increased in July.

Stocks in Tokyo surged after machinery orders increased for the second day in a row and investors reacted positively to the comments from Chinese officials. Stocks in resource sector and linked to domestic economy were in favor in trading. Oki Electric plunged 11%.

Australian markets traded sharply higher and iron ore price jumped above $100 a ton. Mining companies gained after Chinese officials offered to increase stimulus if needed.

Commodities, Bonds and Currencies

The yield on 10-year bond increased to 1.75% and on 30-year bond closed up at 2.92%.

The U.S. dollar inched lower to $1.289 to a euro and decreased against the Japanese yen to 77.86 yen.

Immediate delivery futures of Texas crude oil decreased 33 cents to $96.84 a barrel and Brent crude added 30 cents to $115.70, futures of natural gas added 0.06 cents to $3.05 per mbtu and gasoline price edged down 4.4 cents to 299.95 cents a gallon.

In metals trading, copper decreased 0.65 cents to $3.69 per pound, gold fell $2 to $1,732.90 per ounce and silver decreased 29 cents to $33.28.