Wall Street Rally Lifts S&P 500 2%, China Imports Drop

Nichole Harper
08 Sep, 2015
New York City

Wall Street indexes rebounded in a broad rally and the dollar advanced. Crude oil declined and European markets gained more than 1%. Indexes in Japan extended last week loss of 7% and China reported weaker than expected imports data.

[R]3:35 PM New York City, New York – Wall Street indexes rebounded in a broad rally and the dollar advanced. Crude oil declined and European markets gained more than 1%. Indexes in Japan extended last week loss of 7% and China reported weaker than expected imports data.[/R]

U.S. indexes rallied more than 2% after falling more than 3% last week. The latest market rebound was broad based and followed similar bounces in Asia and Europe.

Investors are looking at the Fed for the next rate hike as early as this month but the mixed jobs report last week and inflation below the 2% target may help delay any Fed action.

Markets are expected to be volatile for the next several weeks and indexes are expected to bounce around largely on sentiment and less on fundamentals.

Yield on the U.S. 10-year T note increased to 2.19% from 2.13% last week.

On Wall Street, Tollbooth Strategy Index increased 115.33 or 1.1% to 10,243.99.

S&P 500 index jumped 33.31 or 1.7% to 1,954.42 and the Nasdaq Composite Index gained 90.61 or 1.9% to 4,774.42.

Crude oil in New York slid 11 cents to $45.94 a barrel and gold rose $2.60 to $1,124 an ounce.

U.S. Movers

General Electric Company jumped 2.1% or 51 cents to $24.51 after the diversified industrial conglomerate today received regulatory approval to acquire the power business of France-based Alstom SA in $13.5 billion.

Shares of Alstom increased 1.3% to €28.98.

Mylan NV rose 20 cents to $48.25 after the U.K.-focused pharmaceutical company offered to acquire the Ireland-based generic drug and ingredients maker Perrigo Company Plc for about $27.14 billion in cash-and-stock.

The offer valued Perrigo at about $185.52 per share, 4% to the closing price of Friday.

Strategic Hotels and Resorts Inc ((BEE)) jumped 3.5% or 47 cents to $14.07 after the self-managed real estate developer agreed to be acquired by the world’s largest real estate investor Blackstone ((BX)),

Under the terms, the deal offered for $14.25 per share or $6 billion including debt, a premium of 4.8% on closing price of Friday.

European Markets

European indexes gained more than 1% across the board, with the DAX leading 1.61% for the day, recovering from more than 2% losses for the previous week.

German imports and exports reached record highs for July. German trade surplus reached an all-time high of 22.8 billion euros or $25.6 billion, reflecting strong demand across wider Europe.

A relatively weak euro helped boost exports, especially to the U.S., the largest trading partner.

Second quarter gross domestic product increased 0.4% from 0.3%, according to the revised data, the Statistical Office of the European Communities said. Estimate for the first quarter was revised to 0.5% from the previous estimate of 0.4%.

Compared to a year ago period, gross domestic product jumped 1.5% in the euro zone and 1.9% in the wider region of EU28.

In London trading, FTSE 100 index jumped 77.11 or 1.3% to 6,151.53 and in Frankfurt the DAX index increased 188.23 or 1.9% to 10,297.41.

In Paris, CAC 40 index gained 62.57 or 1.4% to 4,612.21.

Betfair Group Ltd slid 0.1% to 3,132 pence after the U.K.-based online gambling operator and its rival Paddy Power agreed on a £5 billion or $9.2 billion merger agreement.

The Shareholders of Betfair are entitled to receive 0.4254 of New Paddy Power Betfair shares in exchange for each Betfair Share and shareholders of Paddy Power will receive a special dividend of €80 million.

The merger is expected to complete in the first-quarter of 2016.

RSA Insurance Group Plc gained 0.9% to 508.14 pence after the U.K.-based general insurer signed contracts to sell its operations in Latin America to rival Suramericana SA, subsidiary of Colombia''''s Grupo de Inversiones Suramericana for about £403 million or $617 million in cash.

The transaction is expected to close by the end of 2016.

Asian Markets

Nikkei average in Tokyo dropped more than 2% taking the index in the negative zone year to date.

Nikkei has plunged nearly 18% from the high in February and declined 7% in the last week alone.

Stocks in Tokyo traded lower and the benchmark Nikkei average dropped in the negative zone for the year to date after China reported weaker than expected economic data.

On the domestic economic front, Japan said economy contracted less than estimated largely on the revision in the inventory data. The higher level inventories in the quarter suggest additional weakness in the third quarter.

The gross domestic product was upwardly revised for the second-quarter to decline 0.3%, less than the previously estimated 0.4% fall in July, the Cabinet Office said.

For the year, GDP contracted 1.2% and declined less than the previous estimate of 1.6% decline.

The current account surplus in July soared to 1.81 trillion yen from 55.8 billion yen surplus in June and the trade deficit rose to 108 billion yen from 102.6 billion yen in the previous month, the Ministry of Finance said.

Total export in July jumped 4.6% to 6.54 trillion yen compared to 6.46 trillion yen in June while imports declined 6.5% to 6.65 trillion yen from 6.35 trillion yen in the previous month.

Total bank lending in August jumped 2.7% to 490.28 trillion yen and unchanged from the July, the Bank of Japan said.

The Nikkei 225 Stock Average dropped 433.39 or 2.4% to 17,427.08 and the broader Topix index slumped 28.94 to 1,416.71.

Ms&Ad Insurance Group Holding Inc dropped 2.6% to 3,568 yen after the insurance company’s subsidiary Mitsui Sumitomo Insurance agreed to buy the U.K-based non-life insurance and reinsurance underwriter Amlin Plc for 670 pence a share.

Mitsui Sumitomo agreed to pay 635 billion yen or £3.47 billion or $5.34 billion.

The transaction is expects to close in the first-quarter of fiscal 2016.

Separately, the insurer said total premium earned in August jumped 7.6% to 215.30 billion yen from a year ago month. Premium in voluntary automobile business increased 3.8% to 98.93 billion yen and premium earned in fire segment soared 23% to 40.09 billion yen.

Stocks rebounded in Mumbai trading after three weeks of volatile trading.

Steelmakers advanced after a government appointed commission recommended increasing import duties on steel products and protect domestic industry from the rising imports from Japan, South Korea and Russia.

Tata Steel soared 7.3%, Vedanta jumped 4.7% and Steel Authority of India surged 10%.

Banks advanced in active trading and Yes Bank, ICICI Bank and Axis Bank jumped between 2% and 5%.

Pharmaceutical companies traded lower for the third day in a row and Dishman Pharma, Unichem, Natco Pharma, and Wockhardt declined between 3% and 4%.

Rupee strengthened 26 paisa to 66.56 against one U.S. dollar.

The Sensex Index jumped 424.06 or 1.7% to close at 25,317.87. The CNX Nifty advanced 129.45 or 1.7% to 7,688.25.

SpiceJet plans to buy around 100 turboprop aircrafts with list price of $3 billion.

Zomato, restaurant information and review site operator raised about $60 million.