U.S. Indexes Soar 1% on Merger Monday

Nichole Harper
18 Aug, 2014
New York City

Market indexes on Wall Street soared 1% after investors focused on merger deals and domestic corporate news. Central bankers from around the world are scheduled to attend annual symposium organized by Federal Reserve this week.

[R]12:45 PM New York – Market indexes on Wall Street soared 1% after investors focused on merger deals and domestic corporate news. Central bankers from around the world are scheduled to attend annual symposium organized by Federal Reserve this week.[/R]

Stocks on Wall Street advanced sharply after a week of doldrums but geopolitical tensions showed no signs of abating.

Over the weekend, U.S. expanded its air strike and facilitated the Iraqi and Kurdish take-back of Mosul dam from rebels and also stepped up bombing air strike.

Separately, foreign ministers of Ukraine and Russia met for five hours in Europe to settle an uprising in the Eastern Ukraine with cultural and industrial ties to Russia.

However, investors focused on merger deals announced on Monday and Dollar General offered all cash deal to acquire Family Dollar. The competing bid is superior to the one offered by Dollar Tree and investors held out for a revised bid.

IBM also won a regulatory approval to sell its server business to China based Lenovo Group for $2.3 billion.

Tollbooth Index slipped 0.5% or 47.22 to 9,300.63.

S&P 500 index increased 0.9% or 16.55 to 1,971.61 and the Nasdaq Composite Index gained 1% to 43.36 to 4,508.61.

U.S. Movers

Dollar General Corp ((DG)) surged 10.1% or $5.79 to $63.26 after the discount retailer made a proposal to acquire Family Dollar Stores, Inc. for $78.50 per share in cash, in a transaction valued at $9.7 billion.

The company said shareholders of Family Dollar will receive $466 million of additional aggregate value compared to Dollar Tree''s offer.

Ingersoll-Rand Plc ((IR)) increased 2.1% or $1.28 to $61.83 after the industrial machinery maker signed an agreement to acquire the assets of Cameron International Corporation’s centrifugal compression unit for $850 million.

The acquisition is expected to close before the end of 2014.

European Markets

In London trading, FTSE 100 index gained 0.7% or 49.54 to 6,738.62 and in Frankfurt the DAX index climbed 1.4% or 127.99 to 9,220.59.

In Paris, CAC 40 index jumped 1.2% or 51.56 to 4,225.92.

Telecom Italia SpA rose 0.3% to €0.81 after the Italy-based communications company plans offer up to €7 billion or $9.4 billion to acquire Vivendi''s Brazilian broadband unit GVT.

On August 5, Telefonica SA offered 11.96 billion reais or $5.3 billion in cash and shares in its domestic unit for GVT.

Asian Markets

Stocks in Tokyo closed higher for the fourth day in a row and resource linked stocks gained. Chugai Pharmaceuticals soared 15% on the speculation the Roche Holding may make a bid for the rest of the stake in the company. Geopolitical risks continued to weigh on markets in Tokyo and Asia.

Market indexes in Tokyo extended gains for the fourth day in a row and the yen traded above 102 mark after oil prices lifted stocks in the resource sector.

Investors focused on domestic corporate news in the absence of economic data and stocks gained after people close to Roche Holding suggested that the company may make a bid on the rest of the stake in Chugai Pharma.

The Nikkei 225 Stock Average edged up 4.26 to 15,322.60 and the broader Topix index rose 0.58 to 1,271.26.

The yen closed at 102.41 against one U.S. dollar.

The Sensex Index climbed 287.73 or 1.1% to close at 26,390.96 The CNX Nifty jumped 82.55 to 7,874.25.