While you were sleeping: Deals, Apple lift Wall Street

Tuesday 10th March 2015

Wall Street moved higher amid a fresh flurry of takeover deals and as expected Apple released details of its new smartwatch.

Shares of Apple gained, last up 1.6 percent, after the company released its Apple Watch and revealed an updated 12 inch MacBook.

Shares of Macerich jumped, last up 6.4 percent, after Simon Property Group offered to buy it in a deal valued at about US$22.4 billion including debt. Shares of RTI International Metals rallied, last up 39.6 percent, after Alcoa agreed to buy it for about US$1.26 billion.

“That’s always encouraging, that companies are finding value in other companies,” Richard Sichel, chief investment officer at Philadelphia Trust, told Bloomberg.

In afternoon trading on Wall Street, the Dow Jones Industrial Average rose 0.94 percent, the Standard & Poor’s 500 Index gained 0.50 percent, while the Nasdaq Composite Index added 0.30 percent.

"You'll see these kinds of deals continue to be announced since money is so cheap right now that you can borrow all you need to make them happen," Tom Mangan, senior vice president at James Investment Research in Xenia, Ohio, told Reuters. "This will be very good for small cap stocks, and it also suggests that the market isn't overly expensive overall."

Gains in shares of United Technologies and those of Microsoft, up 1.8 and 1.7 percent respectively, propelled the Dow higher.

Shares of General Motors also gained, last up 1.6 percent, after the car maker announced a US$5 billion share buyback program.

Euro zone bonds rose as the European Central Bank began its new government bond buying program of 60 billion euros a month, which will include purchases of debt with negative yields as long as they are not below the central bank’s deposit rate, currently at minus 0.2 percent.

Germany’s 10 year yield fell eight basis points to 0.31 percent, approaching the record low 0.283 percent set on February 26.

“The amount bought may be small to start with, but this will be like a pressure cooker,” Ciaran O’Hagan, head of European rates strategy at Societe Generale in Paris, told Bloomberg. “They have just switched on the heat and we will need some time for the pressure to mount.”

To be sure, Greek bonds, and stocks fell amid concern about the nation’s lack of progress on reforms needed to maintain the support of its international lenders. Greece’s ASE Index slumped 4.2 percent.

"Little has been done since the last Eurogroup (meeting two weeks ago) in terms of talks, in terms of implementation," Eurogroup chairman Jeroen Dijsselbloem said on arrival for the meeting of ministers of the 19 nation currency bloc, Reuters reported.

"We have to stop wasting time and really start talks seriously," he said.

Europe’s Stoxx 600 Index ended the session with an 0.3 percent decline from the previous close. The UK’s FTSE 100 Index fell 0.5 percent, while France’s CAC 40 Index shed 0.6 percent. Germany’s DAX bucked the trend, closing 0.3 percent higher.

BusinessDesk.co.nz

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