U.S. Stocks Turn Lower on Merger Monday, Apple in Focus

Nichole Harper
27 Apr, 2015
New York City

On Merger Monday, iGATE agreed to be acquired by France-based Cap Gemini and Mylan rejected hostile offer from Teva Pharmaceuticals. Apple Inc is scheduled to release earnings after the bell. U.S. 10-year Treasury yield was 1.93% and the euro held at $1.08.

[R]1:35 PM – On Merger Monday, iGATE agreed to be acquired by France-based Cap Gemini and Mylan rejected hostile offer from Teva Pharmaceuticals. Apple Inc is scheduled to release earnings after the bell. U.S. 10-year Treasury yield was 1.93% and the euro held at $1.08.[/R]

Stocks turned lower in afternoon trading on Wall Street after biotech and healthcare sector led the decliners. Crude oil extended gains in the year so far and gold rebounded.

On Merger Monday, Mylan rejected unsolicited $40 billion bid from Teva Pharmaceuticals and iGATE Corp agreed to be acquired by Cap Gemini for $4 billion.

On Wall Street, Tollbooth Strategy Index edged up 0.02% or 2.33 to 10,920.56.

S&P 500 index rose 1.48 or 0.07% to 2,119.14 and the Nasdaq Composite Index fell 4.83 or 0.1% to 5,086.99.

Crude oil in New York rose 22 to $57.37 a barrel and gold soared $26.60 to $1,201.60 an ounce.

Federal Reserve rate setting committee is scheduled to start its 2-day meeting Tuesday and investors expect the central bank to hold rates and continue with its bond buying program.

U.S. Movers

iGATE Corp ((IGTE)) climbed 3.4% or $1.58 to $47.42 after the France-based IT services company Cap Gemini agreed to acquire the rival for $4 billion.

Cap Gemini combined group revenue for fiscal 2015 estimated of about $13.58 billion or €12.5 billion.

The two India-American co-founders of the company stand to make $1 billion. Co-chairmen Ashok Trivedi holds 12.81% and Sunil Wadhwani controls 12.99% and collectively stakes are worth $1 billion.

Mylan NV ((MYL)) slumped 3.5% or $2.67 to $73.39 after the pharmaceutical company said its board unanimously rejected unsolicited bid from Teva Pharmaceutical Industries Ltd.

On Friday, Mylan raise its offer to acquire Perrigo from $28.9 billion to $33 billion.

European Markets

European markets generally closed higher and Greece replaced its finance minister as the point person to negotiate with international lenders as talks drag on for more than three months.

In London trading, FTSE 100 index gained 0.6% or 42.64 to 7,113.34 and in Frankfurt the DAX index climbed 1.8% or 216.62 to 12,027.47.

In Paris, CAC 40 index jumped 1.4% or 71.87 to 5,273.32.

Capgemini Group, the technology and outsourcing services provider said revenues in the first-quarter ending in March soared 10.5% to €2.76 billion and operating margin in the range of 9.5% to 9.8% and free cash flow to exceed more than €600 million from a year ago period.

Separately, the company agreed to acquire the U.S.-based iGATE Corp for $48 a share in cash or about $4 billion.

The two India-American co-founders of the company stand to make $1 billion. Co-chairmen Ashok Trivedi holds 12.81% and Sunil Wadhwani controls 12.99% and collectively stakes are worth $1 billion.

iGATE employs more than 24,000 people in India and globally about 33,000.

Deutsche Bank AG declined 4.2% €30.24 after the Germany-based investment bank reported group revenues in the first-quarter ending in March soared 24% to €10.4 billion from €8.4 billion in a year ago period.

Net income in the quarter tumbled 50% from a year ago to €559 million from €1.1 billion and diluted earnings per share declined to €0.38 from €0.98.

The bank said quarterly profit declined mainly due to litigation settlement expenses of €1.5 billion with the U.S. and U.K. regulators related to inter-bank rates and levy charges of €561 million.

The bank added litigation reserves were €4.8 billion and plans to reduce the stake in Postbank consumer unit through a public offering and shrink its securities business.

Revenue from corporate banking and securities segment soared 15% to €4.7 billion and revenues from Deutsche asset and wealth management business surged 29% to €1.4 billion. Private and business client’s segment revenue edged up to €2.5 billion.

Sandvik AB soared 9.2% to 106.75 kronor after the Sweden-based mining and construction equipment maker said revenues in the first-quarter ending in March climbed 12% to 23.33 billion kronor from 20.78 billion kronor in a year ago period.

Net profit in the quarter plunged 72.1% from a year ago to 415 million kronor compared to 1.49 billion kronor and diluted earnings per share dropped to 0.33 kronor from 1.19 kronor.

Asian Markets

Stocks in Tokyo lacked direction ahead of central bankers meeting in Japan and the U.S. and the beginning of Golden Week holiday.

In volatile trading, market indexes in Tokyo lacked direction and at closed slipped ahead of central bankers meeting in Tokyo and in Washington, D.C.

Stocks were in a holding pattern ahead of corporate earnings announcements and Bank of Japan is expected to keep its bond buying program intact.

Market trading is likely to be subdued ahead of Golden Week holidays starting on Wednesday.

The Nikkei 225 Stock Average slipped 36.72 or 0.2% to 19,983.32 and the broader Topix index edged up 0.23 to 1,619.07.

The yen closed at 119.32 against a dollar.

Mazda Motors eased on weaker profit outlook and Mitsubishi Motors said operating profit is expected to decline 8% in the current fiscal year.

In Mumbai, India, market indexes and rupee fell selling pressure and as the latest earnings announcements added to the growing list of companies missing estimates.

The widely followed Sensex index dropped 0.9% and wiped out gains in the year, rupee extended losses fell to the low last seen in December.

Rupee weakened 8 paisa to 63.48, and the currency dropped 1.9% in the last five days in the largest retreat in seven months.

The Sensex Index declined 260.95 or 0.9% to close at 27,176.99. The CNX Nifty dropped 91.45 or 1.1% to 8,213.80.

Market indexes in Mumbai turned lower and rupee dropped to a five-month low. Bharti Infratel net in the quarter jumped 18%. ICICI Bank net and revenues climbed.

Maruti Suzuki India net soared 61%. Ultratech Cement net declined 24% but revenues rose 5%.

ICICI Bank Limited slipped 1.9% to ₹302.40 after the private bank said net in the fourth-quarter advanced 10.81% to ₹2,922 crore. Total sales in the quarter jumped 12.23% to ₹16,234.73 crore.

The ratio of non-performing assets in the quarter increased 1.92% compared to 1.9% in the same period last year.

Maruti Suzuki India Limited advanced 3% to ₹3,646.70 after the largest automaker said net in the fourth-quarter soared 60.51% to ₹1,284.24 crore.

Total revenues in the quarter climbed 11.48% to ₹13,944.74 crore.