Stocks rose as dip buyers emerged after the market selloff, tempering concern over remarks from Federal Reserve officials that pointed to a slow economic recovery. The dollar climbed.
Most groups in the S&P 500 advanced, with retailers and real-estate companies leading gains. Tech giants drove the Nasdaq 100 to a back-to-back rally, while the Dow Jones Industrial Average underperformed. The benchmark gauge dropped earlier Tuesday as Fed Chairman Jerome Powell said the economy has a long way to go before fully recovering and will need further support. Meanwhile, Chicago Fed President Charles Evans noted that rates could rise before the inflation target is reached.
Equities are still heading toward their first monthly slide since March on concern Congress hasn’t agreed on another fiscal stimulus package, while an increase in global virus cases has raised the specter of more lockdowns. British Prime Minister Boris Johnson announced new restrictions that are likely to last six months and told people to work from home if possible, saying the country is at a “perilous turning point” for the virus.
Congressional Democrats and Republicans and the White House have opened negotiations to resolve a dispute over farm aid that had raised the risk of a U.S. government shutdown on Oct. 1. To facilitate the talks, the House may scrap plans to vote later Tuesday on a stopgap spending bill that lacked Republican and White House support.
“We think equities will move higher over the medium term, thanks to the likely development of a successful vaccine, an end to election uncertainty, the passage of new U.S. fiscal stimulus, and continued extraordinary global monetary support,” wrote Mark Haefele, chief investment officer of global wealth management at UBS Group AG. “However, the path to ‘more normal’ is likely to be bumpy,” he said, adding that “we therefore expect volatility to persist over the balance of the year.”
Financial and energy stocks, once dominant within the S&P 500, are taking even more of a back seat to technology shares than they did as a bull market ended 20 years ago.
The two industry groups together have trailed the weight of the S&P 500 Technology Index by as much as 17 percentage points this month, according to data compiled by Bloomberg. That’s less than a point away from a low in March 2000 — a figure that isn’t adjusted for a September 2018 index shift, which lifted the ratio by 5.1 points in just one day. Bespoke Investment Group LLC highlighted the comparison in a blog post Monday.
These are some of the main moves in markets:
The S&P 500 climbed 0.7 per cent as of 2:55 p.m. New York time.
The Stoxx Europe 600 Index advanced 0.2 per cent.
The MSCI Asia Pacific Index dipped 0.9 per cent.
The Bloomberg Dollar Spot Index climbed 0.5 per cent.
The euro dipped 0.5 per cent to US$1.1716.
The Japanese yen weakened 0.3 per cent to 104.93 per dollar.
The yield on 10-year Treasuries decreased less than one basis point to 0.66 per cent.
Germany’s 10-year yield advanced three basis points to -0.51 per cent.
Britain’s 10-year yield gained five basis points to 0.203 per cent.
West Texas Intermediate crude advanced 0.1 per cent to US$39.33 a barrel.
Gold depreciated 0.4 per cent to US$1,904.41 an ounce.
Silver depreciated 1.1 per cent to US$24.45 per ounce.
Coronavirus: Alberta's top doctor says "we have a challenge" as 1440 cases confirmed over weekend – Global News
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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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