A return of the “bad news is good news” paradigm has seen global markets race ahead on the back of poor Chinese trade figures.
“Markets have woken up to further signs of economic weakness being displayed in China, with the overnight trade figures once again highlighting that the China economy is facing severe downside pressures. There was another noticeable decline in the trade figures, with both the weakening import and export numbers causing concerns for different reasons,” commented Jameel Ahmad, chief market analyst at foreign exchange firm FXTM.
The figures have raised the prospect that the People’s Bank of China (PBoC) will provide further stimulus to ensure that the government’s target of 7% growth in gross domestic product (GDP) this year is met.
On this basis, the bulls were having a field day in equities markets today, and the US was no exception, with the S&P 500 37 points, or 1.9%, higher at 1,968, the Dow Jones industrial average 293 points firmer at 16,397 and the Nasdaq Composite 100 points to the good at 4,784.
Supermarket leviathan Walmart (NYSE:WMT), up 3.7%, was the top performer early doors, closely followed by three tech giants: Intel (NASDAQ:INTC), Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) – the latter ahead of its big public relations event tomorrow at which it is expected to unveil another money spinning version of its iPhone.
Chevron (NYSE:CVX), down 22 cents at US$76.48, was the only Dow constituent to retreat, as the price of the most actively traded futures contract for West Texas Intermediate slipped 1.5% to US$45.35 a barrel.
Bid activity has provided most of the excitement in terms of news flow, with TECO Energy (NYSE:TE) up 24% after welcoming a takeover approach late last week by Emera (TSE:EMA).
The Canadian energy and services company is proposing to offer US$27.55 for each TECO share in a deal that values the US utility at US$10.4bn once the assumption of the US firm’s debt is factored in.
SunEdison (NYSE:SUNE) advanced in morning trade after the provider of photovoltaic energy agreed to acquire a 33% interest in a portfolio of solar assets from Dominion Resources (NYSE:D) for roughly US$300mln.
Shares of the Maryland Heights, Minnesota-based company were up 4.5% at US$12.54, after reaching US$12.78, the highest intra-day price since August 20. Dominion’s shares were up 1.9% at US$68.50.
Strategic Hotels (NYSE:BEE) climbed 45 cents to US$14.06 after agreeing to be bought out by private equity firm Blackstone for US$6bn, equivalent to US$14.25 a share.
Canadian healthcare group Concordia (NASDAQ:CXRX, TSE:CXR) fell back after it announced it is to pay US$3.5bn to acquire Amdipharm Mercury in a cash plus stock deal.
European private equity group Cinven has agreed to sell Amdipharm for £800mln (circa US$1.2bn) plus 8.49mln common shares of Concordia, valued at around US$0.7bn, while Concordia will also take on around US$1.4bn of the acquired company’s debt.
Concordia shares shed 6.3% at US$103.68.