Stock markets rose yesterday, with Wall Street higher on several big deals and Europe led by a surge in Spain’s IBEX index, while oil prices fell after Iraq said it wanted to be exempt from an Opec deal to cut production.
Merger and acquisition activity spurred Wall Street, headed by Saturday’s announcement by telecommunications company AT&T Inc that it plans to buy Time Warner Inc. for $85.4 billion in what would be the biggest deal in the world this year if approved by regulators.
Iraqi oil minister Jabar Ali al-Luaibi said Baghdad wants to be exempt from any production cut the Organisation of the Petroleum Exporting Countries is aiming to achieve.
Brent crude futures were down about one per cent, or 51 cents, at $51.27 a barrel by 1500 GMT. US West Texas Intermediate (WTI) crude was also about one per cent lower, by 54 cents at $50.30.
However, losses were capped by comments from Iran’s deputy oil minister Amir Hossein Zamaninia, who said Tehran would encourage other Opec members to join an output freeze.
The Dow Jones industrial average rose 91.87 points, or 0.51 per cent, to 18,237.58, the S&P 500 gained 10.17 points, or 0.47 per cent, to 2,151.33 and the Nasdaq Composite added 46.70 points, or 0.89 per cent, to 5,304.10.
AT&T was down 1.52 per cent and Time Warner was last down 2.22 per cent. AT&T’s chief executive told investors he expects the planned acquisition to receive regulatory clearances.
TD Ameritrade also said it would buy privately-held Scottrade Financial Services in a deal valued at $4 billion. And little-known China Oceanwide Holdings Group pledged $3.8 billion in a deal to take control of US insurer Genworth Financial.
Spain’s IBEX index led gains in Europe on signs that 10 months of political deadlock could end. The impasse has paralysed the government in one of the countries worst hit by the eurozone’s debt crisis.
Conservative leader Mariano Rajoy was on course to secure a second term in power for his People’s Party (PP) after the Socialists agreed to abstain in a confidence vote this week.
The IBEX was up 1.27 per cent, outstripping its German and French equivalents, which were 0.47 per cent and 0.36 per cent higher, respectively.
US Treasury yields lurched higher, in line with a rise in global bond yields, with traders seeing little action ahead of next week’s Federal Open Market Committee meeting.
Yields on benchmark German Bunds rallied from three-week lows, while UK bonds rose from one-week troughs.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.42 per cent. Japan’s Nikkei was 0.29 per cent higher while Shanghai outperformed, rising 1.21 per cent.
“It feels to us like ‘China’ has taken a back seat in discussions among market participants. We are wary about this apparent complacency,” Citi macro strategist Jeremy Hale said.