Wall Street's euphoria over EU measures seems to be vaporizing, as reflected by the U.S. index futures, which point to a narrowly mixed opening on Monday. Some of the nervousness may be in anticipation of the release of the results of the Institute for Supply Management's manufacturing survey shortly after the markets open. That said, reflecting the waning of risk appetite, most risk asset classes are retreating. Although Wednesday's public holiday may serve to keep trading activity subdued, M&A announcements may render some color to the markets.
As of 6:15 am ET, the Dow futures are adding 7 points and the S&P 500 futures are gaining 1.60 points, while the Nasdaq 100 futures are moving down 0.25 points.
U.S. stocks advanced in the week ended June 29th, capitalizing on the resolve of the European leaders to find a genuine solution for the debt malaise plaguing the region. Along with other risk assets, equities also rallied, with energy and housing stocks leading the gains.
The Labor Department's monthly jobs report, the weekly jobless claims data, the ADP's private sector payrolls numbers and the results of the Institute for Supply Management's manufacturing and non-manufacturing surveys are among the closely watched reports of the unfolding week.
The Commerce Department's construction spending report and construction spending reports for April and announcements concerning the Treasury auctions of 3-year and 10-year notes and 30-year bonds round up the economic events of the week.
The results of the manufacturing survey of the Institute for Supply Management are due out at 10 am ET. Economists expect the index to show a reading of 52 for June compared to 53.5 in May.
The Commerce Department's construction spending report to be released at 10 am ET is expected to show a 0.2 percent increase in May following a 0.3 percent increase in April.
In corporate news, GlaxoSmithKline (GSK) and Theravance (THRX) said the results of 4 pivotal phase III studies of its treatment for chronic obstructive pulmonary disease showed statistically significant improvement compared to placebo.
Bristol-Myers Squibb (BMY) announced a deal to buy Amylin Pharma (AMLN) for $31 per share in cash or about $5.3 billion. AstraZeneca (AZN) will make a $3.4 billion cash payment to Amylin following the completion of its acquisition by Bristol-Myers Squibb.
Linde announced that it has signed an agreement with Lincare Holdings (LNCR) for acquiring Lincare for $41.50 per share in cash or $4.6 billion in total.
Brightpoint (CELL) pre-announced second quarter results, expecting adjusted income from continuing operations of 14 cents per share on revenues of $1.25 billion to $1.3 billion. The company also said it is withdrawing its full year guidance. Separately, the company announced a deal to be bought by Ingram Micro (IM) for $9 per share in cash or $840 million in total.
Avnet (AVT) announced a deal to buy data center solutions and services distributor Magirus Group. The deal is expected to close in October 2012.
The major Asian markets, with the exception of the Japanese and the South Korean markets, closed higher, as sentiment about the situation in eurozone continued to remain positive in the wake of the EU proposals. Sentiment also got a boost from the positive results of the Bank of Japan's quarterly Tankan survey. The Hong Kong market remained closed on account of a public holiday.
Australia's All Ordinaries closed up 37 points or 0.89 percent at 4,173. Energy and material stocks spearheaded the advance following the increase in the price of commodities.
Japan's Nikkei 225 average opened sharply higher, but surrendered most of its advance by the afternoon. The index moved broadly sideways thereafter, closing down 3.30 points or 0.04 percent at 9,003. The strengthening of the yen in response to the positive Tankan survey weighed on exporters. Glassmakers, resource and real estate stocks also came under selling pressure.
On the economic front, an index measuring sentiment among large Japanese manufacturers improved to -1 in the second quarter compared to expectations for -4.
The results of HSBC and Markit Economics' survey as well as the purchasing managers' index compiled by the China Federation of Logistics and Purchasing and the National Bureau of Statistics showed that the manufacturing sector in China continued to contract in June.
The European markets are adding on to their gains, as traders remain optimistic concerning the domestic debt situation. Financial stocks, engineering and construction stocks are advancing strongly.
As widely speculated, Barclays (BCS) announced the resignation of its Chairman Marcus Agius following the $453 million settlement the bank made last week in connection with accusations related to manipulating the LIBOR rates.
Final estimates released by Markit Economics showed that the euro area's manufacturing sector contracted for the eleventh straight month in June. The purchasing managers' index remained flat at 45.1, although it represented an upward revision from the preliminary reading of 44.8. A report released by Eurostat showed that the eurozone's unemployment rate rose to a record 11.1 percent in May from 11 percent in April.
by RTT Staff Writer
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