U.S. stocks climbed to an almost six-week high amid a rally in some of the world’s largest technology companies.
The S&P 500 extended gains into a fourth day and the Nasdaq 100 posted its biggest advance since April after surging as much as 4.1 per cent. Amazon.com Inc. soared ahead of its Prime Day while Apple Inc. jumped as the tech giant — whose price target was raised by RBC Capital Markets — is set to embrace 5G as one of its most significant additions to this year’s iPhones. Twitter Inc. rallied on an upgrade at Deutsche Bank, which also boosted its price estimates for other companies that derive their revenue from digital advertising such as Facebook Inc. and Alphabet Inc.
After plunging into a correction last month, the tech-heavy gauge extended its surge from this year’s lows to more than 70 per cent. Investors have once again turned back to the companies flush with cash that can thrive if the economic recovery slows down. Prospects for a quick end to the stalemate over a new stimulus faded Monday with members of the House being told not to expect any action this week and many Senate Republicans rejecting the White House proposal for a deal.
“People are going back to the trade that’s worked, and that’s the growth trade,” said Keith Gangl, a portfolio manager of Gradient Investments. “People are worried about missing out, so they are going right to the tech leaders.”
The hearings for the Supreme Court nomination of Judge Amy Coney Barrett began Monday in the Senate Judiciary Committee as Republicans try to cement a conservative majority on the court before the Nov. 3 election.
Elsewhere, oil slumped with workers in the U.S. Gulf heading back following Hurricane Delta’s landfall and Libya taking a major step toward reopening its biggest field. The offshore yuan sank after China’s central bank took steps to restrain the currency’s rally. The Treasury market was closed for a U.S. holiday.
Here are some key events coming up:
- JPMorgan, Citigroup and BlackRock report earnings on Tuesday; results from Wells Fargo, Bank of America and Goldman Sachs are due Wednesday; Morgan Stanley’s earnings are scheduled for Thursday.
- U.K. Prime Minister Boris Johnson set a deadline of Thursday to thrash out the outline of a European Union trade deal.
- European Central Bank President Christine Lagarde leads off the virtual annual meetings of the International Monetary Fund and the World Bank Group. Through Oct. 18.
These are some of the main moves in markets:
- The S&P 500 climbed 1.6 per cent as of 4 p.m. New York time.
- The Stoxx Europe 600 Index gained 0.7 per cent.
- The MSCI Asia Pacific Index advanced 0.9 per cent.
- The Bloomberg Dollar Spot Index gained 0.1 per cent.
- The euro fell 0.1 per cent to US$1.1812.
- The British pound climbed 0.2 per cent to US$1.3065.
- Germany’s 10-year yield fell two basis points to -0.55 per cent.
- Britain’s 10-year yield declined one basis point to 0.271 per cent.
- The Bloomberg Commodity Index fell 0.6 per cent.
- West Texas Intermediate crude declined 2.8 per cent to US$39.47 a barrel.
- Gold weakened 0.4 per cent to US$1,923.01 an ounce.
–With assistance from Adam Haigh, Anchalee Worrachate and Lynn Thomasson.
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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