Stocks on Wall Street surged to an all-time high yesterday on optimism over merger activity that also lifted global equities markets, while crude oil prices rose, helped by expectations of revived growth in the demand for oil.
US stocks advanced in a broad rally, pushing the benchmark S&P 500 to a record as the Nasdaq punched to a new high for 2014 and levels last seen almost 14 years ago, when the technology bubble was imploding.
A surprise improvement in German business morale added to optimism over the eurozone’s recovery, helping to boost European shares.
The lifting of Spain’s sovereign debt rating one notch by Moody’s Investors Service Inc. also helped boost European shares.
Recent US data that came in below expectations had fuelled concern that equity markets were over-valued. But that view was offset by a string of merger and acquisition activity.
Radio frequency chipmaker RF Micro Devices Inc agreed to buy peer TriQuint Semiconductor Inc for about $1.6 billion, and Men’s Wearhouse Inc raised its offer for Jos. A. Bank Clothiers Inc by more than 10 per cent.
Billionaire investor Carl Icahn’s renewed call for the spinoff of eBay Inc’s fast-growing PayPal division added to the merger frenzy.
“The M&A news still seems to be moving forward between the RF Micro deal, the Jos. A Bank deal and Carl Icahn’s pushing on eBay,” said Rick Meckler, president of hedge fund LibertyView Capital Management LLC in Jersey City, New Jersey.
“For some investors that suggests the markets may not be over-valued if it allows for this kind of activity,” he said. Shares of RF climbed 15.7 per cent to $6.725, while TriQuint gained 21.2 per cent to $11.19. Men’s Wearhouse rose 9.1 per cent to $49.23, while Jos. A. Bank was up 8.2 per cent at $59.58.
Shares of eBay rose 3.3 per cent to $56.38.
Reduced tensions in Ukraine, where new authorities issued an arrest warrant for mass murder against ousted President Viktor Yanukovych, also boosted sentiment, Meckler said.
MSCI’s all-country equity index rose 0.77 per cent, while the FTSEurofirst 300 index of top European shares closed up 0.64 per cent at a preliminary 1,351.65.
German business morale rose in February to its highest since July 2011, Munich-based Ifo think tank’s business climate index showed, suggesting Europe’s largest economy will grow at a faster pace in the first quarter after expanding only modestly last year.