Markets Today: Stock Indexes Push Higher on M&A Activity
U.S. stock index futures this morning are trading higher on increased M&A activity, with Seagen surging more than +16% in pre-market trading after the Wall Street Journal reported that Pfizer is in early-stage talks to acquire the company. Also, Focus Financial Partners is up more than +6% after CD&R said they would purchase the company for $53 a share in a deal valued at more than $7 billion.
A decline in bond yields today is also supportive for stocks, with the 10-year T-note yield down -2.1 bp to 3.922%
Today’s U.S. economic news was positive for stocks after Jan capital goods new orders nondefense ex-aircraft, a proxy for capital spending, unexpectedly rose +0.8% m/m, stronger than expectations of unchanged and the biggest increase in 5 months.
Positive corporate news is supportive of the overall market. Union Pacific is up more than +5% after Dow Jones reported that hedge fund Soroban Capital Partners is pushing to replace the company’s CEO. Also, Frontier Communications, Universal Insurance Holdings, and Pulmonx Corporation are up at least +2% after being upgraded.
On the negative side, Tegna slumped more than -17% in pre-market trading after the Federal Communications Commission shelved Standard Gerneral’s proposed $5.4 billion buyout of the company. Also, Range Resources is down more than -7% after Pioneer Natural Resources said it’s “not contemplating “ a deal for the company. In addition, Noble Corp is down more than -1% after forecasting 2023 adjusted Ebitda that was below the consensus.
Overseas stock markets are mixed. The Euro Stoxx 50 today is up +1.95%. China’s Shanghai Composite stock index closed down -0.28%, and Japan’s Nikkei Stock Index closed down -0.11%.
The Euro Stoxx 50 index today is moderately lower. Strength in technology stocks and retailers is leading the overall market higher. Associated British Foods Plc rose more than +2% after the company said it sees first-half sales 20% ahead of last year. Also, Hennes & Mauritz climbed more than +4% after Bank of America upgraded the stock. Interest rate-sensitive stocks are under pressure today after hawkish comments from ECB President Lagarde pushed the 10-year German bund yield up to an 11-year high of 2.579% when she said, "there's every reason to believe that we'll do another 50 bp rate hike in March." European stocks were also undercut by an unexpected decline in Eurozone Feb economic confidence.
Eurozone Jan M3 money supply rose +3.5% y/y, weaker than expectations of +3.9% y/y and the smallest increase in 8-3/4 years.
Eurozone Feb economic confidence unexpectedly fell -0.1 to 99.7, weaker than expectations of an increase to 101.0.
ECB President Lagarde said, "there's every reason to believe that we'll do another 50 bp rate hike in March," and "we'll hike more if needed to return inflation to 2%."
China’s Shanghai Composite today closed moderately lower. Chinese stocks were under pressure on concern that last Friday’s U.S. unexpected acceleration of inflation will prompt the Federal Reserve to raise interest rates further, which could slow economic growth and demand for Chinese goods. Losses in the overall market were limited by optimism that this weekend’s National People’s Congress (NPC) will lead to increased stimulus measures to revive economic growth. According to UBS Group AG, history shows that mainland stocks tend to rally ahead of the NPC meeting on policy tailwind hopes, with property and healthcare stocks seeing the largest excess returns following the meetings over the past decade.
Japan’s Nikkei Stock Index today closed slightly lower. Japanese utility stocks retreated today after Jiji Press reported that five electric power companies will likely delay their plans to raise prices until May or later. Losses in the overall market were limited as exporter stocks gained after the yen fell to a 2-1/4 month low against the dollar, which boosted the earnings prospects of exporters. The yen was under pressure on expectations that Bank of Japan Governor nominee Ueda will maintain the BOJ’s ultra-easy monetary policy when he said the BOJ’s current stimulus outweighs its side effects and that underlying inflation needs to show a major shift to change the course of monetary policy.
Pre-Market U.S. Stock Movers
Seagen (SGEN) surged more than +16% in pre-market trading after the Wall Street Journal reported that Pfizer is in early-stage talks to acquire the company.
Union Pacific (UNP) jumped more than +5% in pre-market trading after Dow Jones reported that hedge fund Soroban Capital Partners is pushing to replace the company’s CEO.
Payoneer Global (PAYO) climbed more than +3% in pre-market trading after Jeffries initiated coverage of the stock with a buy rating.
Focus Financial Partners (FOCS) may move higher today after CD&R said they would purchase the company for $53 a share in a deal valued at more than $7 billion.
Xpeng (XPEV) jumped more than +5% in pre-market trading after it was announced that the company was added to the Hang Seng China Enterprises Index effective March 13.
Pulmonx Corporation (LUNG) rose more than +3% in pre-market trading after Wells Fargo Securities upgraded the stock to overweight from equal weight.
Universal Insurance Holdings (UVE) climbed more than +3% in pre-market trading after Piper Sandler upgraded the stock to overweight from neutral.
Frontier Communications (FYBR) rose more than +2% in pre-market trading after Raymond James upgraded the stock to strong buy from outperform.
Tegna (TGNA) slumped more than -17% in pre-market trading after the Federal Communications Commission (FCC) shelved Standard General’s proposed $5.4 billion buyout of the company. Wells Fargo Securities said the FCC’s move suggests the deal will fall through.
Best Buy (BBY) slid more than -1% in pre-market trading after Telsey Advisory Group downgraded the stock to market perform from outperform.
Noble Corp (NE) fell more than -1% in pre-market trading after forecasting 2023 adjusted Ebitda of $725 million-$825 million, weaker than the consensus of $859.6 million.
Range Resources (RRC) tumbled more than -7% in pre-market trading after Pioneer Natural Resources said it’s “not contemplating “ a deal for the company.
Wingstop (WING) slid more than -1% in pre-market trading after Northcoast Research downgraded the stock to neutral from buy.
Today’s U.S. Earnings Reports (2/27/2023)
AES Corp/The (AES), Occidental Petroleum Corp (OXY), ONEOK Inc (OKE), Pinnacle West Capital Corp (PNW), Universal Health Services Inc (UHS), Viatris Inc (VTRS).
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On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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