Regions

Global stocks boosted by M&A pipeline, Fed outlook

April 7
5:25 AM 2015

Global stocks rose on Tuesday, as many European bourses re-opening after the Easter break took on the positive tone set by U.S. markets overnight, with sentiment boosted by a potential trans-Atlantic acquisition.

FedEx Corp (FDX.N) made a 4.4 billion-euro ($4.8 billion) bid to buy Dutch package-delivery company TNT Express (TNTE.AS), sending TNT shares jumping almost a third in value and lifting shares across the sector and beyond.

The M&A feel-good factor for stocks dovetailed with generally low government bond yields, as expectations of the first U.S. interest rate increase since June 2006 continue to cool after last Friday's relatively weak employment data.

The pan-European FTSEurofirst index of leading 300 shares was up 1 percent in early trade at 1602 points .FTEU3. Shares in TNT Express were up 31 percent, easily the biggest gainers in Europe.

Germany's DAX .GDAXI, France's CAC 40 .FCHI and Britain's FTSE 100 .FTSE were also up 1 percent. Spain's IBEX reached its highest level since January 2010 .IBEX.

"Mergers and accusation news is back today in full throttle after FedEx announced their desire to take over TNT Express," said Naeem Islam, chief market analyst at Avatrade.

"The Fed is still data-dependent and any weakness in the economic data is equal to the presence of cheap money. We now have a question mark on a summer rate hike," he said.

U.S. stock futures were pointing to a slightly higher open on Wall Street DJc1 SPc1 NDc1.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS gained 0.3 percent, Japan's Nikkei .N225 rose 1.2 percent and Chinese stocks climbed more than 2 percent to a seven-year high as the quarterly earnings season approached .SSEC.

RBA ON HOLD, AUSSIE DOLLAR JUMPS

In currencies, the biggest mover was the Australian dollar, which rallied more than 1 percent after the country's central bank surprised some by leaving interest rates at a record low 2.25 percent.

The Aussie was up 1.1 percent at $0.7676 AUD=D4, pulling away from the six-year low of $0.7534 plumbed last week.

But given the risks facing the Australian economy, such as sliding prices for iron ore, the country's biggest export, the central bank did leave the door open for future action, saying further easing might be appropriate.

The euro was flat at $1.0922 EUR=, after earlier trading as high as $1.1036 overnight. The dollar was 0.2 percent stronger at 119.80 yen JPY=, up a full yen from Monday's low.

The dollar was struggling, however, to regain all its losses in the wake of last Friday's U.S. jobs report, which showed sub-par job creation in March and downward revisions to the pace of hiring in the previous two months.

The 10-year Treasury yield recovered from two-month lows struck overnight, and was back at a level prior to the jobs data release at around 1.90 percent US10YT=RR.

Comparable German yields were also little changed from the previous trading session at around 0.18 percent EU10YT=RR. Greek and other peripheral euro zone yields were all as much as 5 basis points lower.

Greek finance minister Yanis Varoufakis said on Sunday that Greece "intends to meet all obligations to all its creditors, ad infinitum," seeking to quell fears of a default before a big loan payment Athens owes the International Monetary Fund later this week.

"Varoufakis pledged to meet this week's upcoming 440 million-euro IMF payment on Thursday, easing earlier concerns that the government was to prioritize wages and pension payments over the repayment," said Deutsche Bank strategist John Reid.

In commodities, crude oil dipped, giving back some of the gains made overnight as the market reassessed how quickly Iran might increase exports after a preliminary nuclear deal. Goldman Sachs said prices needed to remain low for months to achieve a slowdown in U.S. output growth. [O/R]

U.S. crude CLc1 was down 1.4 percent at $51.40 a barrel after rallying 6 percent on Monday. Brent also shed 1.4 percent to $57.31 a barrel LCOc1 following its 5.7 percent jump.

Gold retreated as the dollar rebounded. It was last down to $1,211.40 an ounce after hitting a seven-week peak of $1,1224.10 on Monday.

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