Merger activity and higher oil prices boosted stocks.
US stocks climbed to record highs once again amid optimism about merger activity and as investors bet that the plan to cut corporate taxes currently circulating in Washington would bolster earnings. The Dow Jones industrials rose 9.23 points, the S&P gained 0.1 percent and the Nasdaq added 0.3 percent. The energy sector helped power US equities to new record highs as geopolitical concerns failed to dampen sentiment at the outset of the trading week already packed with deal news.
A rally in oil prices sent energy shares higher after the past weekend’s crackdown on dozens of princes and business tycoons in Saudi Arabia, the world’s largest crude exporter. Also boosting shares was Broadcom’s proposed a merger with Qualcomm. Qualcomm advanced after Broadcom offered to buy the smartphone chip supplier for $103 billion, in what could be the biggest ever acquisition in the tech sector. Broadcom retreated. Apple also contributed to the gains. Sprint tumbled to more than a year low after the wireless provider and T-Mobile called off a planned merger. T-Mobile declined. Michael Kors jumped after the company raised its 2017 revenue forecast. Advanced Micro Devices jumped after a report that it plans to team up with Intel to form a personal computer chip unit. Intel was down marginally.
Federal Reserve Chair Janet L. Yellen swore in Randal K. Quarles as a member of the Board of Governors of the Federal Reserve System and as Vice Chair for Supervision. William C. Dudley, President of the Federal Reserve Bank of New York will retire from his position in mid-2018. Mr Dudley will step down before the end of his 10-year term expires in January 2019 to pave the way for a successor, the bank said. The NY Fed has launched a search for his successor. Upon selecting a successor, only the Fed Board needs to approve the selection.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$3.70 to US$1,270.90. Copper futures were up 1.4 percent to US$3.16. WTI spot crude was up US$1.70 to US$57.34. Dated Brent spot crude was up US$2.17 to US$64.24. The US dollar was down the yen, pound, Swiss franc and the Canadian and Australian dollars. It was virtually unchanged against the euro. The Dollar Index was down 0.2 percent. The yield on the US Treasury 30 year bond was down 2 basis points to 2.79 percent while the 10 year note was down 1 basis point to 2.32 percent.
European shares were mostly lower Monday with only the FTSE managing a 1.93 points gain. The CAC was down 0.2 percent, the DAX declined 0.1 percent and the SMI lost 0.4 percent. Rising commodity prices provided a boost to shares of mining and energy stocks, while shares of bank stocks were under pressure. Some investors also took profits on recent gains. Investors were slightly rattled by a political shake-up in Saudi Arabia that analysts are calling a purge in favor of the Crown Prince Mohammed bin Salman.
Deutsche Telekom declined after merger talks between Sprint and T-Mobile ended. QSC rallied after the telecommunications provider backed its FY17 outlook after posting turnaround results for the third quarter. Accor edged higher after its third biggest shareholder was arrested in Saudi Arabia on Saturday night as part of a sweeping anti-corruption crackdown. Royal Dutch Shell advanced to finish at a record high. Barclay’s declined on a broker downgrade. Miners BHP Billiton, Anglo American and Rio Tinto were higher buoyed by strong gains for copper and oil prices.
SysGroup plunged after reporting weak first-half earnings. The managed IT services and cloud hosting provider has warned that it expects fiscal year EBITDA and adjusted profit before tax to be significantly below market expectations. Tullow Oil rose as oil prices hit their highest levels since 2015 amid signs of tightening market conditions. Rio Tinto rallied after the company elevated another leader to its executive committee. Novartis ended the day unchanged and Roche slipped. Nestlé finished lower in Zurich.
According to survey results from Sentix, Eurozone investor confidence reached its highest level in more than ten years in November. The investor sentiment index climbed more-than-expected to 34.0 in November from 29.7 in October. This was the highest since July. Eurozone September producer price inflation climbed 2.9 percent on the year, following a 2.5 percent increase in August.
The October euro area composite output PMI declined to 56.0 in October from 56.7 in September. Germany's factory orders increased unexpectedly in September driven by foreign demand, while domestic orders remained weak. Factory orders grew 1 percent on the month but slower than August's revised 4.1 percent increase.
Asian stocks ended mixed on Monday as US President Donald Trump kicked off his tour of Asia in Japan over the weekend with a tough rhetoric. An anti-corruption crackdown in Saudi Arabia resulted in the arrest of several Saudi princes and ministers.
The Shanghai Composite was up 0.5 percent even though banking stocks fell after People's Bank of China Governor Zhou Xiaochuan spelled out his strategy to ward off systematic financial risks. The Hang Seng was down 6.81 points.
The Nikkei added 9.23 points while the Topix slipped 0.1 percent after a long holiday weekend. Banks Mitsubishi UFJ Financial Group, Mizuho Financial and Sumitomo Mitsui Financial Group retreated after Bank of Japan Governor Haruhiko Kuroda said the Bank would closely monitor the effects of the continued low interest rate environment on the functioning of financial institutions.
SoftBank Group retreated after the company and T-Mobile US called off their merger talks. Fast Retailing advanced after reporting an 8.9 percent rise in same-store sales for October. Automaker Mazda Motor slumped after posting disappointing quarterly results. In economic releases, the latest survey indicated that the services sector expanded at an accelerated pace in October to a reading of 53.4 — a 26-month high.
Both the S&P/ASX and All Ordinaries were 0.1 percent lower Monday. Gains in energy stocks were offset by losses in the financial sector after Westpac Banking posted a weaker-than-expected net profit and warned the outlook is becoming more challenging. Westpac retreated and ANZ was lower after unveiling plans to close its retail banking business in the Philippines. Commonwealth and NAB also declined. Energy stocks Oil Search, Origin Energy, Santos and Woodside Petroleum advanced after oil prices hit their highest levels since 2015 amid signs of tightening market conditions.
The Kospi retreated 0.3 percent on profit taking. The Sensex edged 0.1 percent higher.
The Reserve Bank of Australia announces its monetary policy decision. Germany posts September industrial production. The Eurozone reports September retail sales. In the US, October NFIB small business optimism index and September JOLTS will be released along with consumer credit.
Global Stock Markets
Note — all releases are listed in local time.