While you were sleeping: Putting cash to work

While you were sleeping: Putting cash to work

(BusinessDesk) January 25 - Equities on Wall Street and in Europe started the week on a positive note after Intel Corp detailed a share buyback plan and amid a raft of M&A deals such as Rock-Tenn Co’s takeover of Smurfit-Stone Container Corp.

In early afternoon trading, the Dow Jones Industrial Average gained 0.71%, the S&P 500 Index rose 0.50% and the Nasdaq Composite Index climbed 0.93%.

Intel lifted technology stocks by increasing its stock-buyback plan by US$10 billion.

Smurfit-Stone Container soared 27% after Rock-Tenn agreed to buy the maker of material for cardboard boxes for US$3.5 billion.

“It’s animal spirits coming back to the corporate side,” James Paulsen, chief investment strategist at Minneapolis- based Wells Capital Management, told Bloomberg News.

“Earnings have been great and companies are flush with cash. That allows them to engage in buybacks and M&A activity, which in turn boosts optimism on stocks.”

Meanwhile, Groupon was considering an initial public offering and was in talks with bankers, founder and Chief Executive Andrew Mason told Reuters on Monday.

"We've met with a bunch of bankers, we're exploring whether or not it makes sense for us but we haven't made a decision. We're still in the learning phase," Mason told Reuters in an interview at the DLD media conference in Munich.

CNBC reported that the offering could be US$1 billion to US$1.5 billion.

Mason declined to comment on whether Groupon had recently received a US$6 billion takeover bid from Google, Reuters said. Media have reported that the offer was rejected by Groupon.

The Stoxx Europe 600 Index gained 0.3% to 281.99.

Northern Foods Plc soared on a report that Greencore Group Plc was considering increasing its bid for the maker of Fox’s biscuits and Goodfella’s frozen pizzas.

Worse-than-expected earnings sent shares of Royal Philips Electronics NV 5.5% lower.

The difference in yield between 2- and 30-year U.S. Treasuries narrowed, before the U.S. will sell US$35 billion of the shorter-term securities tomorrow.

The yield gap narrowed to 3.93 percentage points after touching 4.02 percentage points on January 20, the steepest slope to the so-called yield curve since Bloomberg records on the data began in 1977.

The euro last traded at US$1.3607, compared with US$1.3613 late in New York on Friday.

The greenback is at two-month lows against a basket of major currencies, with the dollar index last trading 0.32% lower 77.96.

The U.S. dollar bought 82.61 yen, trapped in a range between 81 yen and 84 yen seen so far this month.

An export ban from top producer Ivory Coast by Alassane Ouattara, who aims to stop cash reaching his presidential rival, sent cocoa to near its highest price in three decades as U.S. trader Cargill complied with demands for an export.

Oil declined amid weaker stock markets and rising U.S. oil inventories.

Brent crude for March was down 30 cents to US$97.30 a barrel by 1449 GMT. U.S. crude for March lost US$1.27 to US$87.84.

"The [U.S.] dollar strengthened and the stock market looks a little tired so this looks like crude testing support after last week's losses and the inventory builds," Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut, told Reuters.

After third consecutive weekly loss last week, gold rose today.

Spot gold was bid at US$1,346.45 an ounce at 1612 GMT, against US$1,342.25 late in New York on Friday. U.S. gold futures for February delivery rose US$4.80 an ounce to US$1,345.80.

(BusinessDesk)

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