MERGERS AND ACQUISITIONS UPDATE: flow from the North American session…

Blackstone (BX) are to purchase GE Japan’s (GE) residential real estate for over JPY 190bln. Nexstar Broadcasting Group (NXST) announced that it has entered into a definitive agreement to acquire the equity interests and assets of KLAS-TV, the CBS (CBS) affiliate for USD 145mln plus working capital from Landmark Media Enterprises. Sysco (SYY) is closing in on a deal to win regulatory approval for its USD 3.5bln acquisition/merger with closest rival US Foods, according to sources. RANsquawk sources note takeover talk for Homeaway (AWAY) with Priceline (PCLN) a touted bidder – Unconfirmed Aviva (AV /LN) in talks to buy GBP 5bln Friends Life (FLG LN)


RANsquawk Today’s Trading Edge

TIME: 1708GMT/1208EST
NEWS: Aviva (AV/ LN) in talks to buy GBP 5bln Friends Life (FLG LN). 
REACTION: Aviva’s ADR did not move following the first rumours circulating, in fact their shares fell up to 2.7% between 1723GMT and 1736GMT, however after confirmation by both boards, Aviva’s shares moved higher by 1.5%.

TIME: 1625GMT/1125EST
NEWS: Datawatch (DWCH) cuts to in-line vs. outperform at Imperial Capital
REACTION: In an immediate reaction DWCH shares fell 1.6% from USD 8.99 to USD 8.85

TIME: 1546GMT/1046EST
NEWS: Royal Bank of Scotland (RBS LN) has recognised error in its calculations of modelled common equity tier 1 ratios for 2014 EBA stress test results
REACTION: In an immediate reaction, RBS LN shares fell 0.5% from GBP 3.84 to GBP 3.77. However, over a 7-minute period the Co. shares fell a total of 3.8%, touching a session low at GBP 3.69

TIME: 1509GMT/1009EST
NEWS: Flowers Foods (FLO) reports increased dividend rate and stock repurchase; to buy back up to 7.1mln shares
REACTION: In an immediate reaction, Co. shares rose 1.6% from USD 19.19 to USD 20.10

TIME: 1505GMT/1005EST
NEWS: US EPA said to drop renewable fuel quotas proposed for 2014. RANsquawk analysts were quick to point out that this could be of importance for related stock Pacific Ethanol (PEIX) 
REACTION: RANsquawk analysts quickly identified that the news may be negative for Pacific Ethanol (PEIX) and as such PEIX shares immediately fell 6.2% from USD 14.58 to USD 13.67. 

TIME: 1032GMT/0532EST
NEWS: China unexpectedly cuts interest rates, expands deposit rates floating range, cuts 1y deposit rate by 25bp, cuts 1y lending rate by 40bps
REACTION: Analysts immediately squawked this headline with extra gusto as the announcement was unscheduled and given the ramifications it would have across asset class. Over the following 7 minutes the DAX Dec’14 future rose 46 points from 9626.00 to 9672.00, in a 9 minute reaction the e-mini S&P rose to record highs at 2068.00 in a move of 11 points, USTs fell 4+ ticks over the following 26 minutes from 126.18 to 126.13+, spot gold rose USD 11.67 from USD 1,189.13 to USD 1,200.80 over a 7 minute period and AUD/USD rose a total of 94 pips from 0.8629 to 0.8723. A major financial newswire did not pick up on the news for a full 5 minutes after it was squawked by the desk, by which time most of the major moves were already over

TIME: 0829GMT/0329EST – 0846GMT/0346EST
NEWS: ECB’s Draghi says inflation situation in the euro area has become increasingly challenging, and will seek to raise inflation as fast as possible. ECB’s Draghi says QE in US and Japan has led to significant FX depreciation. RANsquawk analysts were quick to identify the news and point out that these comments were overtly dovish from the ECB president and thus could indicate an increasing possibility of an ECB stimulus programme. Adding that wishing to raise inflation as fast as possible and commenting on the efficacy of other central bank’s QE programmes is highly indicative that the ECB are continuing to shift their bias in favour of a QE programme, which would be beneficial for both European equities and fixed income products while placing further downward pressure on the EUR
REACTION: Following the initial comments from ECB’s Draghi and analysis by RANsquawk analysts the Dec’14 DAX future rose a total of 47 points from 9553.00 to 9600.00 over the following 30 minutes, Dec’14 Bunds rose 21 ticks over the following 16 minutes from 151.63 to 151.84 and EUR/USD fell a total of 85 pips from 1.2543 to 1.2458 in a 32 minute period

TIME: 0502GMT/0002EST
NEWS: Skymark (9204 JT) and Japan Airlines (9201 JT) in talks for alliance, Co.’s would code-share and capital injection unlikely, according to Nikkei
REACTION: In an immediate reaction 9204 JT shares rose 23.7% of JPY 197.25 to JPY 245.05

TIME: 0143GMT/2043EST
NEWS: Japanese Finance Minister Aso says speed of JPY weakening has been too fast
REACTION: In an immediate reaction USD/JPY fell 25 pips from 117.95 to 117.70 before extending the move by a further 24 pips to 117.46, taking the total size of the move to 49 pips


US MARKET WRAP – Equities gain amid a surprise rate cut from the PBOC and dovish comments from ECB President Draghi

US equity indices close out the week’s final session firmly in positive territory despite trending lower throughout the day. US equities gapped higher at the open following dovish comments from ECB President Draghi in the European morning although the majority of the buoyancy came from a surprise rate cut from the PBoC. However, from the off US equities began to trend lower as participants took profits from new record highs ahead of the weekend. Another factor was a note from Goldman Sachs that said that the China rate cuts are unlikely to have a big direct impact. 

In the fixed income markets, the reaction to the news out of China was very much equity based. The strong bid tone seen in equities weighed on USTs however, this heavy selling was short lived as real money buying and some short covering resulted in a turn around. Analysts also note early month end demand owing to the Thanksgiving holiday next Thursday, with the preliminary BarCap month end extension for US Treasury’s at +0.13yrs.

The energy sector was another story of the PBoC with prices buoyed in the earlier part of the session as easing from China and potential easing from Europe raised prospects for future oil demand. However, as Draghi’s comments weighed heavily on the EUR,  EUR/USD fell resulting in broad USD strength which consequently weighed on the energy complex. Also adding downside scope to oil was the diminishing prospect of OPEC cutting their output at the November 27th meeting after Nigerian oil minister said that OPEC does not necessarily need to cut at next meeting. 

Finally, the DJIA finished up 0.50% at 17807.49, the S&P 500 finished up 0.52% at 2063.38 and the NASDAQ 100 finished up 0.22% at 4251.32.