MARKETS AT A GLANCE
(Data as of approximately 5 p.m. ET)
LAST CHANGE % CHG
DJIA 16943.1 18.82 0.11%
Nasdaq 4336.24 14.84 0.34%
S&P 500 1951.27 1.83 0.09%
Japan: Nikkei 225 15124 46.76 0.31%
Hang Seng 23117.5 166.47 0.73%
Shanghai Composite 2030.5 0.55 0.03%
S&P BSE Sensex 25580.2 183.75 0.72%
Australia: S&P/ASX 5464 27.1 0.50%
UK: FTSE 100 6875 16.79 0.24%
PRICE CHG YIELD%
U.S. 2 Year -1/32 0.427
U.S. 5 Year -5/32 1.676
U.S. 10 Year -4/32 2.604
Australia 10 Year 0/32 3.783
China 10 Year -3/32 4.110
India 10 Year -1/32 8.561
Japan 10 Year -1/32 0.602
German 10 Year -8/32 1.381
LAST(MID) CHANGE
Australia $ (AUD/USD) 0.9354 -0.0003
Yen (USD/JPY) 102.52 -0.01
S. Korean Won (USD/KRW) 1016.7 0.89
Chinese Yuan (USD/CNY) 6.24 -0.0002
Euro (EUR/USD) 1.3593 -0.0001
WSJ Dollar Index 73.34 0
LAST CHANGE % CHG
Crude Oil 104.51 1.85 1.80%
Brent Crude 109.04 1.18 1.09%
Gold 1252.3 -0.2 -0.02%
SNAPSHOT
U.S. stocks edged up, extending record highs, amid a flurry of
deal activity and continued optimism about the U.S. economy.
Treasurys pulled back as debt sales loomed. The euro fell further
as markets continued to digest the ECB's stimulus measures. Oil
advanced on expectations for higher demand. Gold inched higher in
quiet trading.
OPENING CALL
Chinese inflation data are Tuesday's focal point in Asia. Price
pressures remain benign in China, although base effects and a
rebound in food prices should push up consumer price inflation
significantly from April. The May CPI is expected to rise 2.5% on
year, after April's 1.8% gain. Producer prices, which have been
falling every month for two years, should continue to weaken. The
May PPI is seen down 1.5% on year, after a 2% fall in April. Both
sets of data are due at 0130 GMT.
EQUITIES
Stocks crept higher into record territory, as investors were
buoyed by a flurry of deal activity and remained optimistic about
the U.S. economic outlook.
Shares of smaller companies pulled ahead, extending their recent
rebound following a slide earlier this year.
An absence of fresh economic headlines led investors to focus on
a spate of mergers-and-acquisitions news, while they remained
encouraged by last week's series of upbeat economic reports. A
combination of improving data, an optimistic view on corporate
earnings and accommodative central-bank policies around the world
have pushed stocks slowly higher in recent weeks, with major
indexes notching fresh all-time records along the way.
"We believe the U.S. is on a self-sustaining recovery," said
Susan Bao, portfolio manager for the $10.7 billion JPMorgan U.S.
Equity Fund. "The market is quietly climbing walls of worry and so
is the U.S. economy."
Trading volumes were sparse, extending a recent pullback in
stock-market participation. Many traders say the drumbeat of
positive economic news has left investors wary of selling stocks,
while buyers remain content to sit on existing holdings.
"Going into this week, you've got positive economic
momentum...but it's low-volume," said Tom Carter, managing director
at brokerage JonesTrading.
In corporate news, Tyson Foods emerged as the winner in a battle
to acquire Hillshire Brands, topping by almost a billion dollars a
bid by rival Pilgrim's Pride for the maker of Jimmy Dean sausages.
Hillshire rallied 5.3% on the news while Tyson fell 6.5%, and
Pinnacle Foods tacked on 1.4%.
Idenix Pharmaceuticals more than tripled in value after the
developer of hepatitis C treatments agreed to be acquired by Merck
for $3.85 billion. Merck, a Dow component, rose 0.2%.
Hittite Microwave rallied 29% after the company agreed to be
acquired by semiconductor maker Analog Devices in a deal that
values Hittite at about $2.45 billion. Analog Devices rose 5%.
Family Dollar jumped 13.4% after billionaire investor Carl Icahn
disclosed late Friday a 9.4% stake in the discount retailer and
announced plans to seek discussions surrounding strategies to
enhance shareholder value.
Shares of Apple rose 1.6% as the company's seven-for-one stock
split officially took effect. The stock split--the company's first
since 2005--was announced in April.
In Asian trading Monday, markets were mostly higher as strong
export data from China and upwardly revised growth figures from
Japan supported regional sentiment.
FOREX
The euro fell, continuing a slide as the European Central Bank's
latest efforts to stimulate the economy and fight low inflation
made the currency less attractive to investors.
The ECB on Thursday cut its refinancing and deposit rates, and
introduced a series of cheap loans to euro-zone banks. The central
bank said it would also make preparations to purchase asset-backed
securities in the future should inflation not rise
sufficiently.
The moves added momentum to a shift toward dollar-denominated
assets that was already underway as the ECB and the Federal Reserve
diverge in their monetary policies.
The bond market is starting to see the impact, as the difference
between yields on certain government bonds in the euro zone and
U.S. Treasurys has widened. The yields on German bunds and other
European bonds fell last week, while U.S. government bond yields
have mostly risen. Investors are attracted to higher bond yields,
which move inversely with bond prices, as they increase
returns.
"If that progresses, it becomes difficult to argue in favor of
euro strength," said Shahab Jalinoos, managing director in foreign
exchange strategy and macro research at UBS Securities LLC. "As
long as U.S. data is sufficiently strong to keep the Fed from
changing tack, you see the environment conducive to dollar strength
against the euro."
BONDS
Treasury bonds pulled back on less demand for safe assets
because of coming sales of new debt and upbeat data out of China
and Japan.
The Treasury is scheduled to sell $28 billion in three-year
notes Tuesday, $21 billion in 10-year notes Wednesday and $13
billion in 30-year bonds Thursday.
Some encouraging economic releases out of Asia also sent yields
higher. China's exports posted a 7% gain in May, which eased
concerns over a sharp slowdown of the world's second-largest
economy. Meanwhile, Japan's economic growth for the first quarter
of this year was revised higher than initially reported.
Data out of U.S. over the past week have boosted optimism that
the U.S. economy is picking up momentum from the harsh winter,
giving investors another incentive to book profit from the bond
market.
"I think if the data continues to come in as strong as it has
been, then the bull run in Treasury bonds may be definitely taking
a breather," said Anthony Cronin, a Treasury bond trader at Societe
Generale. "It is too early to call it dead, though."
COMMODITIES
U.S. oil futures climbed to a 14-week high as investors looked
toward signs of stronger demand in the second half of the year.
Ahead of the Organization of Petroleum Exporting Countries'
meeting in Vienna on Wednesday, market watchers questioned whether
members of the oil-producers' cartel would increase production to
meet expected higher demand later this year.
OPEC produces one of every three barrels of oil consumed daily
in the world. The cartel has maintained its current production
ceiling of 30 million barrels a day since 2011 and is expected to
leave the ceiling unchanged.
However, analysts expect demand for OPEC's oil to be higher in
the second half of this year, with the International Energy Agency
predicting it will average 30.7 million barrels a day.
Saudi Arabia expects to increase its output, an oil official
with the Kingdom said in Vienna on Monday.
But even with higher Saudi production, "I think (the
supply-and-demand balance) will still be pretty tight in the second
half" of 2014, said Andy Lebow, senior vice president for energy at
Jefferies Bache.
Prices also got a boost from recent macroeconomic data
indicating that oil demand could rise in the top three
oil-consuming nations: the U.S., China and Japan.
Gold futures drifted slightly higher in thin trading as
investors faced no major new economic data following last week's
largely as-expected reading on the U.S. labor market.
TODAY'S HEADLINES
Merck to Buy Idenix for $3.85 Billion
Merck agreed to buy Idenix Pharmaceuticals for $3.85 billion,
more than three times Idenix's value on Friday, in the latest
example of the high value that drug makers are putting on hepatitis
C treatments.
Tyson Wins Battle to Buy Hillshire
Tyson Foods emerged as the winner in a battle to acquire
Hillshire Brands, offering almost a billion dollars more than rival
Pilgrim's Pride's bid last week for the maker of Jimmy Dean
sausages.
PBOC Unveils Targeted Ratio Cuts
China's central bank unveiled details of plans to let some banks
lend more of their deposits, in a move to give the sluggish economy
a boost.
Saudis Expect to Boost Crude Output
Saudi Arabia expects to boost its crude output in the second
half of the year, a Saudi oil official said, in the clearest signal
to date that the OPEC kingpin will respond to rising demand as the
group prepares to meet this week.
McDonald's Sales Still Weak in U.S.
McDonald's said its same-store sales in the U.S. fell again last
month, extending its longest stretch without comparable growth in
its core market in more than a decade.
Netflix Shareholders Vote Down Proposal
Netflix's shareholders voted against a nonbinding resolution to
split up the company's chief executive and chairman positions, a
move some investors and proxy-advisory firms have pushed to improve
corporate governance.
Bullard Says Fed May Raise Rates Sooner Than Many Think
While he stopped short of calling for a change in policy, St.
Louis Fed President James Bullard said the time is fast approaching
when the central bank may need to begin raising interest rates.
NCAA in Videogame Settlement With Ex-Players
The NCAA has announced a $20 million settlement with former
players over college-themed basketball and football videogames
produced by Electronic Arts.
GoDaddy Files for IPO
Internet company GoDaddy filed for its initial public offering,
and said it plans to use part of the proceeds from the IPO to repay
debt and for general corporate purposes
CICC Investment Banking Managing Director Resigns
Marshall Nicholson, a managing director of investment banking at
China International Capital Corp, left the Chinese investment bank
last week, according to an email he sent to colleagues.
RECENT DJ DOMINANTS
Walmart.com CEO in the U.S., Joel Anderson, to Step Down --
Company Memo
Saudis Expect to Boost Crude Output in 2nd Half of the Year,
Source Says
European Officials to Push U.S. to Approve Norwegian Air
Shuttle's Expansion Plan
Pilgrim's Pride Didn't Raise Bid for Hillshire in Auction --
Sources
CICC Investment Banking Managing Director Resigns
TODAY'S CALENDAR
(Times in GMT, followed by country and event)
2245 NZ Q1 Economic Survey of Manufacturing
2350 JPN Apr Tertiary Industry Index
2350 JPN May Money Stock, Broadly-defined Liquidity
0100 PHI Apr Merchandise Export Performance
0130 CHN May PPI
0130 CHN May CPI
0130 AUS Apr Housing Finance
0130 AUS May ANZ Job Ads
0130 AUS May NAB Business Survey
0401 US Q3 Manpower Quarterly U.S. Employment Outlook Survey
0600 JPN May Preliminary Machine Tool Orders
0600 JPN May Preliminary Machine Tool Orders
0600 GER Apr Manufacturing turnover
0645 FRA Apr Industrial production index
0800 ITA Apr Industrial Production
0830 UK Apr UK monthly industrial production figures
0900 ITA Q1 GDP
1000 FRA Apr OECD Composite Leading Indicators
1130 US May NFIB Index of Small Business Optimism
1145 US ICSC-Goldman Sachs Chain Store Sales Index
1255 US Johnson Redbook Retail Sales Index
1400 US Apr Job Openings & Labor Turnover Survey
1400 US Apr Monthly Wholesale Trade
1400 UK May NIESR Monthly GDP Estimates
2030 US API Weekly Statistical Bulletin
2350 JPN Q2 Business Outlook Survey
2350 JPN May Corporate Goods Price Index