While you were sleeping: BlackRock becomes world beater; oil slips

Monday 15th June 2009

BlackRock became the world’s biggest money manager after acquiring Barclays Global Investors for US$13.5 billion, creating a pool of about US$2.8 trillion of assets under management.

BlackRock will pay for the Barclays business with stock, US$6.6 billion in cash and the sale of US$2.8 billion of shares to a group of institutions. Middle East sovereign wealth funds are among those buying the shares, Reuters reported.

Barclays Plc had agreed to sell the IShares exchange-traded funds unit for US$6.6 billion to CVC Capital Partners, which has until June 18 to match BlackRock offer. CVC stands to gain a break fee of US$175 million and is unlikely to make a higher bid, Bloomberg reported.

The Dow Jones Industrial Average edged up 0.3% to 8799.26 on Friday, enough to nudge the index into a year-to-date gain for the first time in 2009 amid optimism the recession in the world’s biggest economy is abating.

Helping stock optimism, US consumer confidence rose to a nine-month high this month. The Reuters/University of Michigan Survey of Consumers reported its preliminary index of confidence rose to 69 from 68.7 last month, the highest since September, when Lehman Brothers collapsed.

Still, inflation measures in the survey showed expectations are that prices will rise. Consumers' one-year inflation expectations rose to 3.1% this month, the highest in nine months, while the five-year inflation outlook rose to 3.1% in June from 2.9% in May.

Bank of America rose 5.8% to US$13.72 and Microsoft rose 2.2% to US$23.33, leading gainers on the Dow.

The Standard & Poor’s 500 rose 0.1% to 946.21. The Nasdaq Composite fell 0.2% to 1858.80 after National Semiconductor Corp, gave an outlook that disappointed some analysts, pushing its shares down 6.1% to US$13.59.

Apple Inc. fell 2.1% to US$136.97 and Research in Motion, which makes the BlackBerry, fell 2.8% to US$83.02.

US Treasuries rose on Friday amid relief that the market was able to absorb three sales of new bonds totaling US$65 billion.

The yield on 30-year bonds fell 7 basis points to 4.62%.

Crude oil fell from an eight month high on Friday as the US dollar strengthened against the euro.

Crude for June delivery fell 0.4% to US$72.04 a barrel on the New York Mercantile Exchange. OPEC lowered its forecast for world oil consumption this year while saying the worst may be over for oil markets.

“As the world economy stabilises, the world oil demand appears to be settling down," OPEC said in its Monthly Oil Market Report.

Copper had its biggest decline in a week while gold had its biggest declined in two months as the dollar gained.

Copper futures for July delivery fell 2.9% to US$2.3735 a pound on the New York Mercantile Exchange. Gold futures for August delivery dropped 2.2% to US$940.70 an ounce in New York.

European industrial production posted a record slump in April from a year earlier on waning demand for the region’s goods.

Output fell 1.9% from March and tumbled a greater-than-expected 21.6% from a year earlier, according to the European Union’s statistics office in Luxembourg said today.

Production of durable consumer goods fell 22.4% and output of capital goods tumbled 26.7%, the statistics office said.

The US dollar rose against the euro and the yen on Friday. The euro weakened 0.5% to $1.4030 and strengthened 0.2% to 137.89. The dollar gained 0.8% to 98.4 yen.

Finance ministers from the Group of Eight wealthiest nations, meeting in Italy, are considering how to close out the measures they put in place in the depths of the credit crisis, amid signs the global economy is climbing out of its slump.

US Treasury Secretary Timothy Geithner said the “force of the economic storm is receding” and “encouraging signs of stabilisation across many economies.”

G-8 nations asked the International Monetary Fund to assist with studying possible ‘exit strategies,’ or ways to end the stimulus measures that have pumped hundreds of billions of dollars into their economies.

The Dow Jones Stoxx 600 Index fell 0.2% to 214.35 with energy companies and miners declining with prices of raw materials.

Royal Dutch Shell fell 1.3% and BP fell 1.8%. BHP Billiton, the world’s biggest mining company, fell 2.1%.

Swedbank soared 23% amid optimism Sweden’s banks will be able to cope with their exposure to loan losses in Eastern Europe.

GlaxoSmithKline Plc jumped 8.1% and Sanofi-Aventis rose 3.3% amid speculation they will benefit from demand for swine flu vaccines after the World Health Organisation raised the flu alert, declaring a pandemic.

HSBC Holdings Plc, Europe’s largest lender, rose 4.4%.

Hedge fund company Man Group rose 6.4%, leading the Dow Jones Stoxx 600 higher, after BlackRock's offer to acquire Barclays Global Investors.

The UK’s FTSE 100 fell 0.5% to 4441.95 and Germany’s DAX 30 fell 0.7% to 5069.24. France’s CAC 40 fell 0.3% to 3326.14.

Businesswire.co.nz

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