S&P Up 1% on Mergers, Volatile Oil, Greece and Earnings

Nichole Harper
05 Feb, 2015
New York City

Mergers, earnings, oil volatility and Greece drove market sentiment in New York and Europe. Pfizer agreed to acquire Hospira for $17 billion. U.S. trade deficit widened to a two-year high. Oil soared nearly 9%. Greece pushed for the rollback of austerity measures as the ECB takes steps.

[R]1:40 PM New York – Mergers, earnings, oil volatility and Greece drove market sentiment in New York and Europe. Pfizer agreed to acquire Hospira for $17 billion. U.S. trade deficit widened to a two-year high. Oil soared nearly 9%. Greece pushed for the rollback of austerity measures as the ECB takes steps.[/R]

Stocks on Wall Street turned volatile following the ups and downs in the oil trading and earnings gained focus of investors.

Crude oil price rebounded 6% after plunging 8.7% on Wednesday and the wild swings in oil trading pit affected stocks of energy explorers, airlines and transportation companies.

In addition, Greece was in focus after ECB tightened lending standards for Greek bonds and cutoff direct lending to struggling nation with unemployment hovering near 24%.

Mergers were also in focus after Pfizer agreed to pay $17 billion for Hospira, the largest provider of injectable drugs and infusion technology.

Also, Under Armour announced the purchase of San Francisco based MyFitnessPal.com. The online company claims 80 million registered users and is popular for its calorie count tools and a community focused on healthy living.

On Wall Street trading, Tollbooth Strategy Index increased 0.9% or 92.18 to 10,238.

S&P 500 index gained 15.86 or 0.8% to 2,057.32 and the Nasdaq Composite Index rose 31.41 or 0.6% to 4,747.10.

Seasonally adjusted weekly jobless claims climbed 11,000 to 278,000 from the previous week revised claims of 267,000, the Department of Labor reported today.

In a separate report, the department said preliminary non-farm business sector labor productivity dropped 1.8% annual rate during the fourth-quarter.

Trade deficit in December widened to $46.6 billion from revised $39.8 billion in November.

December exports fell $1.5 billion but imports increased $5.3 billion from November, the Department of Commerce reported.

U.S. Movers

BT Group Plc ((BT)) climbed 6.1% or $3.88 to $67.89 after the U.K.-based communication service provider agreed to acquire EE for £12.5 billion in cash and new BT ordinary shares.

Following the transaction Deutsche Telekom will hold a 12% stake in BT and the transaction is expected to be complete before the end of fiscal year.

Pfizer Inc ((PFE)) increased 2.6% or 84 cents to $32.91 after the biopharmaceutical company plans to acquire Hospira Inc for about $15 billion to strengthen its generic injectible drugs and biosimilars business.

The drug-makers offered $90 per share in cash, a 39% premium to Hospira''s closing stock price of yesterday.

The deal requires regulatory and shareholder approvals.

European Markets

European markets were under pressure after the ECB tightened bail out conditions for Greece.

European Central Bank said Greek bonds will not be eligible for collateral and also stopped direct funding.

The ECB announced the move late night on Wednesday and had not indicated that such an action was in the making.

Greece will continue to rely on emergency funding provided by the central bank but the access to Emergency Liquidity Assistance will come at an interest rate of 1.5% compared to direct loans from the ECB at 0.05%.

Stocks in Athens declined 5.4% and banks dropped more than 8% after the ECB statement this morning.

Bank of Greece reassured investors and banks that there is sufficient liquidity in the market and banks are “adequately capitalized.”

German finance minister Wolfgang Schaeuble and Greek counterpart were scheduled for a meeting at 12:30 p.m. in Berlin.

Greece is facing an uphill task in winning the support of finance ministers in the euro zone who must approve any changes in bailout conditions or roll back in austerity measures. Only France has publicly supported Greek demand.

Greece is expected to run out of cash by the end of March in the event if ECB or other international lenders fail to advance new loans.

Lenders are reluctant to issue new loans to Greece after the Prime Minister Alexis Tsipras has promised to increase pensions and wages that will violate Greek bailout terms.

In London trading, FTSE 100 index slid 0.3% or 17.78 to 6,842.24 and in Frankfurt the DAX index slipped 0.7% or 73.90 to 10,837.42.

In Paris, CAC 40 index fell 0.4% or 20.46 to 4,675.84.

AstraZeneca Plc dropped 3.1% to 4,540.50 pence after the U.K.-based biopharmaceutical company said revenues in the fourth-quarter ending in December fell 2% to $6.68 billion from $6.84 billion a year ago period.

Net loss in the quarter swung to a loss from a year ago to $321 million compared to profit of $1.54 billion and loss per share swung to 25 cents from earnings per share of $1.23.

Separately, today the company agreed to acquire the rights to Actavis’ branded respiratory business in the U.S. and Canada for an initial consideration of $600 million.

The transaction is expected to complete in this first quarter.

Vodafone Group Plc declined 3.1% to 229.28 pence after the U.K.-based largest mobile communication service provider reported group revenues in the third-quarter ending in December climbed 13.5% to £10.88 billion and EBITDA and reaffirmed annual operating earnings outlook between £11.6 billion and £11.9 billion.

Asian Markets

Corporate earnings in Japan were in focus and Hitachi missed operating earnings estimate but Sony reported best quarterly operating results in seven years. Toyota estimated fiscal year net to increased 17% and sales to gain 5%.

Stocks in Tokyo slipped after Toyota estimated smaller than expected increase in sales and Hitachi missed operating profit estimate.

Investors also remained cautious after the European Central Bank tightened bailout terms for Greece and dropped Greek bonds as acceptable collateral for its bond buying program.

Corporate earnings were in focus in Tokyo trading and Sony soared after the electronics maker reported its best quarterly operating earnings in 28 quarters.

The Nikkei 225 Stock Average slipped 174.12 or 0.9% to 17,504.62 and the broader Topix index fell 6.89 to 1,410.11.

The yen edged up at 117.22 against one dollar.

Stocks in Mumbai declined for the fifth day in a row but information services provider gained after Cognizant Technologies forecasted improving annual revenue growth.

Banks were in focus after Indian Overseas Bank reported a surge in bad loans and ICICI Bank declined for the sixth day in a row after missing earnings estimates last week.

Indian rupee closed at 61.73 against one dollar.

The Sensex Index decreased 32.14 to close at 28,850.97. The CNX Nifty fell 12 to 8,711.70.

Aurobindo Pharma Ltd tumbled 5% to ₹1,149.85 after the natural and ayurvedic medicine maker reported net in the third-quarter slipped 7.93% to ₹384.35 crore.

Total revenues surged 49.34% to ₹3,202.08 crore.

Arvind Limited slipped 1.5% to ₹287.75 after the textile company said net in the third-quarter gained 6.78% to ₹109.10 crore.

Net revenues jumped 17.08% to ₹2,088.73 crore.

The apparel retailer has a portfolio of several popular brands and a retail network and the textile maker has set revenue target of 6,000 crore and expansion through e-commerce business with the help of Creyate.com and other Internet sites.

The Bombay Dyeing and Manufacturing Company Limited plunged 7.9% to ₹75.75 after the textile product maker said net loss in the third-quarter narrowed to ₹65.93 crore compared to ₹93.15 crore in the same period a year ago.

Total revenues rose 6.66% to ₹515.49 crore.