Merger Monday; Stocks, Oil and Copper Fall

123jump.com Staff
20 Apr, 2009
New York City

More than $17 billion of deals failed to overcome the worries from rising bad debt charges at Bank of America. Oracle and Sun Microsystems in $7.4 billion deal, PepsiCo proposed to acquire the remaining stake in two bottlers for $6 billion and GlaxoSmithKline agreed to pay $3.6 billion for Stiefel.

5:00PM New York, 11:00PM Frankfurt, 8:00AM Sydney[R]– More than $17 billion of deals in the U.S. and UK failed to overcome the worries from rising bad debt provision at Bank of America. Oracle agreed to acquire Sun Microsystems for $7.4 billion, PepsiCo proposed to acquire the remaining stake in two bottlers for $6 billion and GlaxoSmithKline agreed to acquire Stiefel for $3.6 billion.[/R]

Global Markets

The three mergers in U.S. and UK totaling $17 billion failed to lift market sentiment in New York and in Europe.

Market indexes declined on both sides of Atlantic and in South America. Bank of America reported higher earnings from a year ago and also took 57% higher charge for bad debts. The sharply higher charge turned investors cautious about the health of the consumers and the economy and led market averages and lending companies lower.

Sun Microsystems agreed to be acquired by Oracle for $7.4 billion two weeks after IBM walked away from the deal. The deal will test alliances between Oracle and other two server makers HP and Dell. Oracle for the first time will sell hardware and software.

PepsiCo ((PEP)) proposed to acquire all the stocks in its two largest bottling companies that it already does not own. The beverage company proposed to pay $29.50 a share for Pepsi Bottling Group and $23.27 a share for PepsiAmericas ((PAS)). The company currently owns 33% of Pepsi Bottling Group and 43% of PepsiAmericas.

In London, benchmark index dropped 2.5% after an industry group revised its estimate of economic contraction and another group estimated 29,000 financial services job losses. GlaxoSmithKline agreed to acquire Stiefel for $3.6 billion and broaden its dermatology products.

Japan crude steel output plunged 46.7% in March as production of autos and industrial machinery declined. Hitachi may access public funds. Toshiba is preparing to raise 500 billion yen in public stock and bond offering. Consumer lenders dropped after Promise reported a net loss on higher charges.

Stocks in Hong Kong and Shanghai closed higher. Unemployment in Hong Kong in March increased to 5.2%. China Mobile, the largest wireless carrier by subscriber reported slowest quarterly earnings growth. China Telecom, the largest fixed line operator reported 27% decline in earnings.

Reserve Bank of India estimated that drivers of economic growth are weakening and economic activity is likely to moderate in the months ahead. Unitech, one of the largest real estate developers is looking to raise 5,000 crore rupees or $1 billion in equity offering. TCS quarterly net rises 4.6%.

Australian producer prices unexpectedly declined 0.4% in March quarter. Rio chairman defends Chinalco $19.5 billion investment as more British investor voice their reservations but fail to provide additional capital. Asciano Group led advancers in the ASX 200 index shares with a rise of 33.2%.

North American Markets

Dow Jones Industrial Average decreased 289.60 or 3.56% to a close of 7,841.43, S&P 500 Index decreased 37.21 or 4.3% to 832.39, and Nasdaq Composite Index decreased 64.86 or 3.9% to close at 1,608.21.

Of the stocks in S&P 500 index, 20 increased, 479 declined and 1 was unchanged.

Capital One Financial led decliners in the S&P 500 index with a loss of 25% followed by losses in Fifth Third Bancorp of 24.4%, in Marshall & Ilsley of 21.4%, in AIG of 20.4%, in Huntington Bancorp of 20.1% and in Regions Financial of 19.8%.

Sun Microsystems led gainers in the S&P 500 index with a surge of 37% followed by gains in Pepsi Bottling of 22%, in Brown Forman of 2.8%, in Coca-Cola Enterprises of 2.6%, in Newmont Mining of 2.4% and in Family Dollar Stores of 1.4%.

South American Markets Indexes

Mexico Bolsa Index decreased 647.35 or 2.9% to 21,587.49. Brazil Bovespa Stock Index declined 1,345.13 or 2.9% to 44,433.15.

Argentina Merval Index plunged 5.20%, Chile Stock Market Select index declined 1.6% and Peru Lima General Index dropped 3.2%. Colombia IGBC General Index decreased 0.7% and Venezuela Stock Market Index increased 0.01%.

Europe Markets Review

In London FTSE 100 Index closed lower 101.94 or 2.49% to 3,990.86, in Paris CAC 40 Index decreased 122.56 or 3.96% to close at 2,969.40 and in Frankfurt DAX index lower 190.54 or 4.07% to close at 4,486.30. In Zurich trading SMI decreased 127.45 or 2.45% to close at 5,065.18.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed higher 17.17 or 0.19% to 8,924.75, Hang Seng index in Hong Kong increased 149.64 or 0.96% closed to 15,750.91, CSI 300 index in China higher 56.98 or 2.15% closed to 2,707.67. ASX 200 index in Australia decreased 7.70 or 0.20% closed to 3,769.00. The KL Composite index in Malaysia higher 3.20 or 0.33% closed to 968.37.

The Kospi Index in South Korea increased 7.39 or 0.56% to close at 1,336.39. SET index in Thailand closed higher 9.48 or 2.08% to 466.28 and JSE Index in Indonesia increased 27.06 or 1.65% closed to 1,661.84. The Sensex index in India decreased 43.59 or 0.40% closed to 10,979.50.

Commodities, Metals, and Currencies

Crude oil decreased $4.56 to close at $45.77 a barrel for a front month contract, natural gas decreased 18 cent to $3.55 per mBtu and gasoline futures decreased 8.52 cents to close at 140.75 cents per gallon.

Wheat futures closed down 18.50 cents in Chicago trading and closed at $5.1625 a bushel. Sugar decreased 0.34 cent in trading at 13.32 cents a pound. Soybean future closed down 30.00 cent to $10.11 a bushel.

Gold increased $18.60 in New York trading to close at $886.50 per ounce, silver closed up $0.26 to $12.05 per ounce and copper for the front month delivery decreased 11.75 cents to $2.08 per pound.

Dollar edged higher against euro to $1.2923 and edged lower against yen to 97.88.

Yields on 10-year U.S. bonds decreased to 2.83% and with 30-year maturities closed down at 3.68%.