Asian markets rose modestly in early trading Wednesday, as traders awaited news from the U.S. Federal Reserve later in the day.
Japan’s Nikkei 225
inched up 0.1%, while Hong Kong’s Hang Seng index
was about flat. The Shanghai Composite
was little changed, and the smaller-cap Shenzhen Composite
fell 0.7%. South Korea’s Kospi
advanced 0.1%. Benchmark indexes in Taiwan
gained, while Indonesian stocks
were flat. Australia’s S&P/ASX 200
On Tuesday, a World Trade Organization panel found the Trump administration’s tariffs against $200 billion of Chinese goods are illegal, though the organization has little recourse to take against the U.S.
New data Wednesday showed Japan’s exports plunged in 14.8% in August, but that was still better than the previous month and beat analysts’ expectations. Exports to China grew 5.1% while exports to the U.S. sank 21.3%.
Japan’s Prime Minister Shinzo Abe and his cabinet officially resigned Wednesday, clearing the way for Yoshihide Suga to be confirmed as the country’s next prime minister.
“Asian markets already have a quiet look about them, as they remain in wait-and-see mode ahead of the latest FOMC rate decision,” Jeffrey Halley, senior Asia-Pacific market analyst at Oanda, wrote in a note.
The U.S. Federal Reserve is expected to signal on Wednesday that its interest-rate policy will remain unchanged and close to zero through the end of 2023. The Fed will release a policy statement at 2 p.m. Eastern, and Chairman Jerome Powell will hold a press conference a half hour later.
Stocks made modest gains Tuesday on Wall Street. The Dow Jones Industrial Average
rose 2.27 points to finish at 27,995.60, while the S&P 500
gained 17.66 points, or 0.5%, to trade at 3,401.20, marking its third straight increase. The Nasdaq Composite
finished up 133.67 points, or 1.2%, at 11,190.32, logging back-to-back gains.
In energy trading, benchmark U.S. crude
rose 68 cents to $38.96 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude
, the international standard, gained 65 cents to $41.18 a barrel.
The U.S. dollar
dipped to 105.28 Japanese yen.
Coronavirus: Alberta's top doctor says "we have a challenge" as 1440 cases confirmed over weekend – Global News
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- Coronavirus: Alberta’s top doctor says “we have a challenge” as 1440 cases confirmed over weekend Global News
- Single-day case count breaks 500 Edmonton Journal
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Cenovus Energy shares plummet on news of its $3.8B deal to buy Husky Energy
The all-share deal by Cenovus Energy Inc. to buy Husky Energy Inc. for about $3.8 billion will likely spark more mega-mergers among Canadian oil and gas majors, according to a veteran oilsands analyst.
“This is likely just the start of big deals in Canadian energy land and thus it begs the question of who is next?” said analyst Phil Skolnick of Eight Capital in a report on Monday.
“As seen in the U.S. with the accelerated M&A activity, when there’s one meaningful transaction, there’s likely more to come.”
Several industry observers point to Calgary-based oilsands producer MEG Energy Inc. as the leading potential target, noting Husky’s failed $3.3-billion hostile takeover attempt of its smaller rival two years ago.
In his report, Skolnick presents scenarios where Canadian Natural Resources Ltd. (sometimes referred to by its stock ticker, CNQ) or Imperial Oil Ltd. buy MEG, while also outlining the numbers involved if Canadian Natural combined with Imperial or Suncor Energy Inc., and if Suncor were to merge with Imperial.
“Some (scenarios) have been asked about before and I was just bringing up some new ones _ like a CNQ and Suncor merger is not something I’ve heard out there, but nor was Cenovus-Husky,” he said in an interview.
“I’m not going to give zero chance to anything anymore.”
Analysts generally applauded the surprise Cenovus-Husky hookup announced Sunday for its operational advantages but criticized the plus-20-per-cent premium in the price for Husky.
“The deal does makes strategic sense,” said Manav Gupta of Credit Suisse in a note to investors.
“Like U.S. E&P (exploration and production companies), Canadian energy companies also need to come together, cut costs and become leaner to better adapt to lower energy demand in post pandemic world.”
He said Cenovus’s reputation as an efficient operator in its steam-driven oilsands projects will help Husky overcome its struggles with operational issues, including higher operating and administrative costs.
The companies have identified $1.2 billion in potential annual cost savings which will include workforce reductions.
But Gupta added the premium is “excessive” and joined other observers in predicting Cenovus shares would trade lower, as they did, falling by as much as 15 per cent to $4.15 in Monday trading in Toronto before closing down 8.4 per cent at $4.47.
Husky, meanwhile, gained as much as 14.2 per cent to $3.62 before closing up 12 per cent at $3.55 .
Husky shareholders are to receive 0.7845 of a Cenovus share plus 0.0651 of a Cenovus share purchase warrant in exchange for each Husky common share if the deal is concluded.
Cenovus shareholders would own about 61 per cent of the combined company and Husky shareholders about 39 per cent.
The transaction must be approved by at least two-thirds of Husky’s shareholders but Hong Kong billionaire Li Ka-Shing controls 70 per cent of Husky’s shares and has agreed to vote them in favour of the deal.
The announcement Sunday came just as Calgary’s oilsands companies are about to start rolling out third-quarter financial results, with Suncor Energy Inc. set to report Wednesday and both Cenovus and Husky scheduled to report on Thursday.
© 2020 The Canadian Press
Ant Group raises $34.4 billion in the biggest IPO of all time – CNBC Television
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- Ant Group raises $34.4 billion in the biggest IPO of all time CNBC Television
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