New York Trading Suggests Market Consolidation Ahead

Bikram Pandey
06 Feb, 2013
New York City

U.S. markets traded sideways and $23.5 billion Liberty Global deal with Virgin Media dominated news cycle. Earnings were also in focus after several companies exceed market expectations. The Nikkei index in Tokyo soared more than 3%.

[R]4:30 PM New York – U.S. markets traded sideways and $23.5 billion Liberty Global deal with Virgin Media dominated news cycle. Earnings were also in focus after several companies exceed market expectations. The Nikkei index in Tokyo soared more than 3%.[/R]

U.S. stocks traded sideways after investors digested better than expected earnings from Ralph Lauren, Time Warner and Walt Disney.

The recent rally that has propelled market indexes to 5-year highs appear to go nowhere today as more investors anticipate market consolidation on technical metrics. Indexes struggled to stay positive by mid-day but dropped right back and stayed there all afternoon.

Liberty Global Inc agreed to acquire U.K. cable television services provider Virgin Media Inc for $16 billion in cash and stock. Including the debt, the deal is valued at $23.3 billion.

Merger news dominated market sentiment after a second deal this topped $24 billion after Dell Inc decided to go private for $24.5 billion.

Royal Bank of Scotland Group Plc agreed to pay the second largest fine linked to the Libor probe to the regulators in the U.S. and U.K. The bank narrowly avoided the criminal charges and its Japanese unit was also snared in the investigation.

On the earnings front, ArcelorMittal fourth quarter net loss widened and BP net plunged 78%. Cummins net tumbled 30% on weaker sales and CVS Caremark net climbed 7% to $1.13 billion. Glaxo net declined 34% and Time Warner net surged 51%. Disney net declined 6%.

European markets traded cautious ahead of the European Central Bank meeting and closely watched Spanish bond auction tomorrow that may raise as much as €4.5 billion. RBS agreed to pay the second largest fine linked to the Libor probe. Liberty Global agreed to acquire Virgin Media for $16 billion.

Banks across the region were under pressure ahead of the European Central Bank meeting tomorrow. Vinci SA declined 4% after it reported weaker than expected 2012 results and guided flat sales in the current year. Volvo AB gained on improving outlook in the U.S. and Europe.

Stocks and market indexes in Tokyo soared after the BOJ Governor Shirakawa announced his departure ahead of schedule. The yen dropped to a new low in the year and the Nikkei staged a sharpest single-day rally in two years and lifted the Nikkei to a 4-year high.

Apollo Tyres third quarter net surged 73% and Bajaj Electricals net plunged 64.4%. IRB Infrastructure net soared 38.5% and Jindal Saw net jumped 64.3%. Indian government will sell 9.5% stake NTPC to raise $2.2 billion.

Australian stocks closed higher and retail sales in December fell more than expected. The Australian dollar fell to its lowest level in the year so far. REA Group gained after profit rose 25%.

Commodities, Bonds and Currencies

U.S. treasury yield on 10-year bond declined to 1.96% and on 30-year bond edged down to 3.17%.

The U.S. dollar inched lower to $1.351 to a euro and increased against the Japanese yen to 93.54 yen.

Immediate delivery futures of Texas crude oil increased 18 cents to $96.86 a barrel and Brent crude rose 43 cents to $116.97, futures of natural gas increased 0.03 cents to $3.43 per mbtu and gasoline traded up 1.53 to 305.30 cents a gallon.

In metals trading, gold increased $4.60 to $1,678.10 per ounce and silver fell 2 cents to $31.86 and copper decreased 1.90 cents to $3.75 a pound.