Markets Overview
- ASX SPI 200 futures up 0.2% to 7,453.00
- Dow Average little changed at 37,334.21
- Aussie little changed at 0.6700 per US$
- U.S. 10-year yield rose 4.5bps to 3.9557%
- Australia 3-year bond yield fell 7.2 bps to 3.71%
- Australia 10-year bond yield fell 8.2 bps to 4.06%
- Gold spot up 0.3% to $2,025.98
- Brent futures up 2.0% to $78.06/bbl
Economic Events
- 11:30: (AU) RBA Minutes of Dec. Policy Meeting
US stocks traded near session highs as the week kicked off on a positive note buoyed by a burst of deals as traders largely ignored tempered messaging from Federal Reserve officials.
On the heels of a seven-week bull run, the S&P 500 rose 0.6% as more than $40 billion of mergers and acquisitions hit the wire on Monday after months of disappointing volumes. The Nasdaq 100 climbed 0.8%, after closing at a record Friday. The blue-chip Dow Jones Industrial Average notched another all-time high after setting several records last week.
Wall Street’s fear gauge — the VIX — continued to hover around 12, within striking distance of recent multi-year lows.
Whether or not the S&P 500 can extend its rally for an eighth week may be determined by data readouts including durable goods orders, personal consumption expenditures — the Fed’s preferred measure of inflation — and the final third quarter gross domestic product estimate.
While stocks largely shrugged off Federal Reserve officials seeking to rein in expectations for earlier and deeper-than-expected rates cuts, the rally in Treasuries took a breather Monday. Yields climbed with the rate on the two-year around 4.5% and the 10-year approaching 4%. The dollar steadied as the yen weakened.
Other News
Companies unveiled a flurry of M&A on what’s likely to be the last major day for deal announcements in 2023, ending the year on a high note after months of disappointing volumes.
More than $40 billion of mergers and acquisitions hit the wire on Monday, including preliminary proposals that haven’t been finalized yet, according to data compiled by Bloomberg. That compares with below $10 billion on the last Monday before Christmas 2022.
Most of the day’s activity was cross-border, with a couple chunky deals coming from Japanese buyers. Nippon Steel Corp. led the way with a $14 billion takeover of United States Steel Corp., offering a blowout price that’s nearly double an earlier offer from a US rival.
Private equity showed it’s still on the prowl, as Clearlake Capital and Insight Partners confirmed a Bloomberg News report they’re taking data analytics firm Alteryx Inc. private in a $4.4 billion deal. Koch Industries Inc.’s $3.6 billion acquisition of an Iowa fertilizer business from Dutch chemical firm OCI NV — first revealed by Bloomberg — also became official, while IBM Corp. bought $2.3 billion of data integration platforms from Germany’s Software AG.
Elsewhere in Europe, telecom tycoon Xavier Niel made a fresh bid to merge his Italian mobile business with Vodafone Group Plc’s local operations in a deal valuing the UK rival’s unit at more than $11 billion. Two London-listed property groups confirmed a Bloomberg story they’re in talks to create the UK’s No. 4 publicly traded landlord, and Coupang Inc. said it will buy the operations of struggling luxury online retailer Farfetch.
Even businesses that had trouble attracting interest in the past were able to find a buyer. Unilever Plc, which previously ran a failed process in 2021 to sell a portfolio of brands including Q-Tips, said Monday that Boston-based buyout firm Yellow Wood Partners was acquiring the unit. Former New York Yankees all-star Alex Rodriguez is also getting a slice of the pie: his blank-check company inked an indicative agreement to merge with a satellite communications provider.
Still, antitrust regulators dampened dealmakers’ holiday cheer a bit. Adobe Inc. said Monday it will scrap its $20 billion purchase of design software maker Figma Inc. after opposition from UK and European Union competition authorities made it almost impossible to come up with palatable concessions.
(Bloomberg)
