While you were sleeping: Equities get a buy call

While you were sleeping: Equities get a buy call

(BusinessDesk) March 22 - Equities on Wall Street and in Europe rose as AT&T Inc’s monster telecommunications deal bolstered optimism.

In afternoon trading, the Dow Jones Industrial Average gained 1.55%, the Standard & Poor's 500 Index rose 1.53% and the Nasdaq Composite Index advanced 1.87%.

Investors cheered AT&T Inc's US$39 billion plan to acquire Deutsche Telekom AG's T-Mobile USA.

At least four brokerages upgraded the AT&T's stock after the agreement, which still requires regulatory approval.

AT&T Chief Executive Randall Stephenson, at an investor conference on Monday, said the company would boost capital spending by as much as US$7 billion in the first few years after the deal in order to integrate the AT&T network with the T-Mobile USA network.

"Any sort of M&A activity has a beneficial impact on the market as a whole because it gives the impression corporate insiders see value in the market," Thomas Villalta, portfolio manager for Jones Villalta Asset Management in Austin, Texas, told Reuters.

Meanwhile, concerns eased about Japan's nuclear crisis. Warren Buffett's comments that shares in Japanese companies represented a buying opportunity also underpinned the positive mood on the markets today.

Wall Street’s fear gauge, the Chicago Board Options Exchange volatility index, fell nearly 15%.

The yen weakened on concerns about more coordinated actions by the Group of Seven countries.

The U.S. dollar rose 0.4% to 81.13 yen, after joint G7 intervention last week boosted the greenback nearly 4% against versus the Japanese currency.

Oil prices rose as U.N.-mandated airstrikes on Libya and spreading unrest in the Middle East underpinned concerns about disruptions to oil supply from the region.

"Oil prices are still significantly higher ... Concern isn't going to go away any time soon and little pullbacks are inevitable," Michael Hewson, a market analyst at CMC Markets told Reuters.

Brent crude futures for May delivery rose US$1.32 to US$115.25 a barrel by 11.38am EDT.

U.S. crude futures for April delivery rose US$1.39 to US$102.46 a barrel. The April contract expires on Tuesday.

Gold, which is set for its tenth consecutive quarterly gain, rose. The most-active U.S. April futures were 1.1% higher at US$1,431.40.

"You can't deny the escalating Middle East problems and the oil price are all supportive factors, but I wonder whether the big jump [in the gold price] is more weaker [U.S.] dollar-related," Credit Agricole analyst Robin Bhar told Reuters.

"It's all contributing to the safe-haven bid, and this week is going to be important ... geopolitical risk factors are uppermost in people's minds."

(BusinessDesk)

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