U.S. Leads 3-day World Markets Rally

Nichole Harper
07 Apr, 2015
New York City

U.S. stocks extended gains for the third day in a row and the dollar remained firm against the euro. Crude oil jumped for the second day and traded above $53 a barrel. India left its interest rate unchanged and Australia held rates at historic low of 2.25%. European markets surged.

[R]12:55 PM New York – U.S. stocks extended gains for the third day in a row and the dollar remained firm against the euro. Crude oil jumped for the second day and traded above $53 a barrel. India left its interest rate unchanged and Australia held rates at historic low of 2.25%. European markets surged.[/R]

Stocks on Wall Street traded higher as investors positioned portfolios for earnings announcements and factored low rate regime will continue.

Market indexes advanced after FedEx offered to acquire TNT Express NV based in Holland for $4.8 billion and Berkshire Hathaway agreed to acquire a minority stake in Axalta Coating Systems Ltd.

After two months of listless trading, U.S. indexes are set to advance for the third day in a row as Alcoa is set to kick off earnings season on Wednesday.

Market rally of last five years have stretched valuations and investors remain focused on the development in labor market, corporate spending and recovery in the housing sector.

Strong dollar has provided headwind to the exports but the sharp plunge in oil price has put more money in the hands of consumer.

On Wall Street trading, Tollbooth Strategy Index gained 0.3% or 30.10 to 10,530.14.

S&P 500 index rose 7.96 or 0.4% to 2,088.60 and the Nasdaq Composite Index increased 28.25 or 0.6% to 4,945.61.

Crude oil in New York jumped $1.13 to $53.27 a barrel and gold declined $6.60 to $1,212 an ounce.

U.S. Movers

Axalta Coating Systems Ltd ((AXTA)) soared 6.9% or $1.97 to $30.30 after the coatings and paint maker said Berkshire Hathaway Inc agreed to acquire 8.7% or a total of 20 million shares at an average price of $28 per share or about $560 million from the leverage buyout firm Carlyle Group LP.

FedEx Corporation climbed 4.3% to $173.85 after the air-freight and logistic company plans to acquire The Netherlands-based express delivery company for about €4.4 billion or $4.8 billion.

FedEx offered €8 per share in cash, which represents a premium of 33% over the closing price of April 2 and a premium of 42% on last three-month average price.

FedEx and TNT Express anticipated that the deal will close in the first-half of 2016.

General Motors Company ((GM)) dropped 1.8% or 65 cents to $36.01 after the Canada government agreed to divest 73.4 million shares worth about $2.69 billion in a deal arranged by Goldman Sachs.

European Markets

European markets surged after the announcement of the deal between TNT Express and FedEx.

In London trading, FTSE 100 index climbed 1.8% or 125.66 to 6,959.12 and in Frankfurt the DAX index jumped 1.42% or 167.98 to 12,135.37.

In Paris, CAC 40 index advanced 1.8% or 90.23 to 5,164.37.

Ryanair Holdings Plc jumped 2.8% to €11.16 after the Ireland-based low-cost airline company said passenger traffic in March soared 28% to 6.67 million from 5.2 million in a year ago month.

The company has flown a total of 90 million passengers, an increase of 9 million after the launch of its latest marketing plan a year ago in March.

The airline added passenger load factor in the month climbed to 90% compared to 80% in a year ago month.

Rio Tinto Limited increased 0.7% to $56.15 after the mining company announced the completion of off-market buy-back offer of about 11.6 million shares worth $560 million, ahead of its target of $500 million.

The buy-back price was $48.44 per share, 14% discount to the market price.

The company added it will continue to buy-back its UK-listed shares till the year-end for a total of US$1.56 billion.

TNT Express NV surged 30% to €7.80 after the Netherlands-based express delivery company received offer from the U.S.-based FedEx Corporation of about €4.4 billion or $4.8 billion.

FedEx offered €8 per share in cash, which represents a premium of 33% over the closing price of April 2 and a premium of 42% on average price of last three months.

FedEx and TNT Express anticipated that the offer will close in the first-half of 2016.

Shares of FedEx Corporation climbed 4.3% to $173.85.

Asian Markets

Nikkei in Tokyo advanced 1.2% and Japanese companies are expected to offer summer bonus of 2.1%.

Energy sector stocks gained after crude oil futures rose 5% after Saudi Arabia lifted prices for Asian delivery. AIT Corp, the parcel and delivery company said annual net income increased 13.5%.

Stocks in Tokyo closed higher and energy sector led the gainers after oil price jumped 5%.

Crude oil future soared 5% after Saudi Arabia controlled Aramco increased oil delivery price for Asian customers on the rising demand in the region.

Inpex Corp gained 4% and Japan Petroleum Exploration advanced 4.2%.

Broader market indexes advanced after New York Fed President William Dudley said when rates begin to rise, the increase is likely to be slow and gradual.

The statement from Dudley carried weight with traders in Tokyo because the statement was the first from the member of the policy making committee indicating the possible Fed’s move.

Domestically, spring wage negotiations across Japan are indicating rising trend started with the announcement from Toyota.

The brokerage firm Nomura indicated bonuses in summer season are likely to increase 2.1%.

The Nikkei 225 Stock Average climbed 242.56 or 1.3% to 19,640.54 and the broader Topix index jumped 17.84 or 1.1% to 1,578.55.

The yen closed at 119.89 against a dollar.

Stocks on Dalal Street gyrated after the Reserve Bank left its reference rate unchanged.

The central bank also lifted its economic growth target to 7.8% in the current financial year ending in March 2016 from the estimated growth rate of 7.5% in the previous financial year ending in March of 2015.

At the end of its first monetary policy meeting in the year, the RBI left its short term lending or repo rate at 7.5% and cash reserve ratio at 4%.

The central bank also kept its statutory liquidity ratio at 21.5% and sounded cautiously optimistic on inflation but said future course of inflation is dependent on the oil price and supply forces.

The central bank estimated a gradual decline in inflation to 6% by January 2016 and decline further to 4% before March 2018.

The BSE Sensex index opened higher in the morning but after the announcement fell as much as 140 points but managed to recover most of the losses by the end of the session.

The Sensex index had logged a surge of 546.97 in the last two sessions.

Rupee weakened 7 paisa 62.25 against one dollar.

The Sensex Index added 12.13 to close at 28,516.59. The CNX Nifty rose 0.40 to 8,660.30.

GMR Infrastructure, Ltd gained 5% to ₹17.70 and the infrastructure services provider received an order for railway project with an estimated cost of ₹5,080 crore.

Future Retail Ltd advanced 1.6% to ₹101.35 after the apparel retailer raised ₹600 crore through non-convertible debenture offering.

Power Finance Corporation Limited dropped 1.6% to ₹273.25 and the central government plans to sell 5% stake to raise about ₹1,500 crore.