Investors start the week with a looming U.S. interest rate hike on the table, a move that will likely set the tone for the markets going into 2016. Not only will the Fed decide whether to raise rates for the first time in a decade, the central bank will also look to assure investors on the likely path of rate increases for the future. Despite market jitters over the last several days, U.S. futures are now modestly in the green.
Economy
China's yuan tumbled further on Monday after the country's central bank continued guiding the currency lower, setting the yuan/dollar official midpoint at its weakest since July 2011. Beijing's introduction of a renminbi exchange rate index - a move that will loosen the yuan's link to the greenback - further weighed on the currency. Meanwhile, data over the weekend showed Chinese industrial production growing at a faster-than-expected pace in November, suggesting that Beijing could reach its growth target of about 7% this year after many rounds of heavy stimulus. Shanghai Composite +2.5%.
Confidence at big Japanese manufacturers held steady in the three months to December, with the Bank of Japan's Tankan survey holding at +12, but it looks like some trouble could be brewing ahead. "The deterioration, especially in manufacturers' outlook, is a bit concerning," said Izumi Devalier, an economist at HSBC Holdings. The survey indicated companies were taking a cautious stance on the future due to general emerging market concerns and weak Japanese consumer spending. Nikkei -1.8%.
South Africa's rand jumped as much as 6.4% in early trade, the most since October 2008, after President Jacob Zuma named the country's second finance minister in four days following public outcry. The move puts Pravin Gordhan - who held the post from 2009 to 2014 - back into the top job. Gordhan successfully steered South Africa's economy through its first recession in 17 years and was able to fend off pressure from labor unions to boost spending.
U.S. natural gas prices have now collapsed to their lowest level in almost 14 years, dropping 4.4% to $1.901 per million British thermal units, as unseasonably warm weather on the U.S east coast cuts demand for the fuel. NYC is expected to see temperatures as high as 63 degrees on Monday, at a time of year when fleece-lined boots are more common attire than t-shirts. Crude prices also started the week on the back foot. The cost per barrel has now fallen below $35.
The first-ever global deal on climate change was signed in Paris over the weekend following two weeks of discussions between 200 nations. The major goal of the agreement is to limit the rise of average global temperatures to within two degrees of where they stood before industrial times. Participation is voluntary, however, which makes it difficult to gauge how effective the landmark deal will be in the future.
Puerto Rico Governor Alejandro Garcia Padilla is expected to make an address later today that will reveal whether he will seek a second four-year term in next year's election. In June, Padilla revealed that the territory he was responsible for faced a serious $72B debt burden, and has since called for concessions from bondholders and lobbied U.S. lawmakers to make it easier to restructure the island's debt. More drama in the making: The U.S. territory owes $332M (backed by constitutional guarantees) on Jan. 1.
After junk-bond prices posted their largest drop since 2011 on Friday, investors say they are bracing for another difficult week, likely featuring hectic trading and large splits between buy and sell orders. Hedge-fund and mutual-fund managers feel that gaps as wide as 10% between the price bondholders are willing to accept and buyers are willing to pay are likely to be commonplace until at least the conclusion of the Fed's two-day meeting on Wednesday.
Stocks
China has given unconditional clearance to a proposed merger between Royal Dutch Shell (RDS.A, RDS.B) and BG Group (OTCQX:BRGYY), clearing the final regulatory hurdle for the $70B tie-up. "We will now seek approval from both sets of shareholders as we move toward deal completion in early 2016," CEO Ben van Beurden declared. Following the transaction, Shell sees the elimination of 2,800 jobs, in addition to previously announced plans to reduce its headcount and contractor positions by 7,500 globally.
Cheniere Energy has replaced chief executive Charif Souki only days after activist investor Carl Icahn boosted his stake in the company to just under 14%. Souki will be switched for board director Neal Shear on an interim basis, Cheniere (NYSEMKT:LNG) said in a statement, adding that board member Andrea Botta was appointed chairman of its board of directors.
They found him! Fosun Group's missing chairman, Guo Guangchang, surfaced at an internal company event this morning, after going missing four days ago. Where was he? It appears Guo was in Shanghai to assist authorities with an unspecified judicial investigation. Despite the location confirmation, shares of the conglomerate's Fosun International (OTCPK:FOSUF) arm and other listed units continued their downhill ride after a trading halt was lifted late Friday. Fosun ended -9.6% in Hong Kong.
Disclosing a price tag for the South China Morning Post, Alibaba (NYSE:BABA) said it paid HK$2.06B ($266M) for the 112-year-old newspaper and other media assets of SCMP Group (OTCPK:SCPXY). In the same filing to the Hong Kong stock exchange, SCMP cited an "uncertain" future for traditional publishing as a key reason behind the sale, adding that Alibaba would likely be able to "unlock greater value" from the business.
As expected, the go-shop period granted to EMC Corp. (NYSE:EMC) to solicit alternative bids has ended without a buyout offer deemed superior to Dell's deal, which consists of $24.05/share in cash and VMware (NYSE:VMW) tracking stock. The Dell deal remains expected to close between May and October 2016, provided regulators and shareholders approve the transaction.
Micron Technology has agreed to buy all the shares it doesn't already own in Inotera Memories, in a deal valued at $3.2B. "The acquisition is the culmination of a highly successful seven year partnership with Inotera," Chief Executive Mark Durcan said in a statement. Micron (NASDAQ:MU), which is expected to take on $2.5B of debt for the purchase, expects the deal to close in the middle of 2016.
Egypt has completed its preliminary report on the Russian Metrojet plane crash in the Sinai at the end of October, stating there was no evidence so far that it was caused by a terrorist or criminal act. The findings go against Russia's confirmation that a homemade bomb brought down the Airbus (OTCPK:EADSY) A321, and U.S. and British theories that explosives were to blame.
Third Point's Daniel Loeb is calling for the removal of Dow Chemical (NYSE:DOW) CEO Andrew Liveris following the company's $130B merger with DuPont (NYSE:DD), WSJ reports. Loeb reportedly sent a private letter to Dow's board on Saturday essentially supporting the merger but questioning whether the deal was rushed to be completed before the expiration of a standstill agreement that had barred him from publicly speaking about Dow until this weekend.
AstraZeneca has confirmed that it's in talks with privately held Acerta Pharma, after WSJ reported on Friday it was looking to acquire the Dutch firm for more than $5B. Although there is no certainty a deal will be reached, AstraZeneca's (NYSE:AZN) interest is closely tied to Acerta's potential blockbuster medicine for blood cancers called acalabrutinib.
Today's Markets
In Asia, Japan -1.8% to 18883. Hong Kong -0.7% to 21310. China +2.5% to 3521. India +0.4% to 25150.
In Europe, at midday, London +0.1%. Paris +0.1%. Frankfurt -0.3%.
Futures at 6:20, Dow +0.3%. S&P +0.3%. Nasdaq +0.3%. Crude -2.2% to $34.85. Gold -0.8% to $1066.90.
Ten-year Treasury Yield flat at 2.14%
In Europe, at midday, London +0.1%. Paris +0.1%. Frankfurt -0.3%.
Futures at 6:20, Dow +0.3%. S&P +0.3%. Nasdaq +0.3%. Crude -2.2% to $34.85. Gold -0.8% to $1066.90.
Ten-year Treasury Yield flat at 2.14%
No comments:
Post a Comment