Wall St gains on deal news, while earnings stay in focus

The ASX is set for a modest lift this morning as US investors digested news of a fresh round of acquisitions.

US stocks rose on the back of deal news and mixed earnings. Picture: AP Photo/Richard Drew.

US stocks rose Monday as companies unleashed a fresh round of deals and earnings.

In Europe, French and German stocks also rallied after upbeat economic data, although the British index fell.

The Australian share market is set for a slight lift this morning, with ASX futures up 3 points at 7.25am (AEDT).

The Dow Jones Industrial Average rose 77 points, or 0.4 per cent, to 18223. The S&P 500 gained 0.5 per cent, while the Nasdaq Composite rose 1 per cent.

Technology shares rose broadly, helping lift the Nasdaq and leading gains in the S&P 500.

B/E Aerospace surged 16 per cent after Rockwell Collins reached a deal to buy it. T-Mobile US added 9.5 per cent after announcing increased profits and market share in the most recent quarter.

Monday’s moves came after the S&P 500 snapped a two-week losing streak on Friday following deal talks and better-than-expected earnings. By the end of this week, 292 companies in the S&P 500 are expected to have reported earnings, according to FactSet.

“It’s all about earnings right now,” said Bill Northey, chief investment officer at the Private Client Group at US Bank, noting company performance rather than macroeconomic developments has been the key driver of stock markets in recent sessions.

Mergers also have been fuelling moves.

Shares of TD Ameritrade lost 4.4 per cent after the company said it agreed to buy Scottrade Financial Services in a $US4 billion deal. Shares of AT&T declined 1.7 per cent after it reached an agreement to buy Time Warner for $US85.4 billion, while shares of Time Warner dropped 3.1 per cent.

“This is an environment where corporations are looking into the future — where interest rates are moving up — and they’re using this as an opportunity to better position themselves in a low-rate environment,” said Robert Pavlik, chief market strategist at Boston Private Wealth. Companies can borrow more cheaply at low rates in order to fund acquisitions.

US government bonds pulled back Monday, with the yield on the 10-year Treasury note settling at 1.763 per cent, up from 1.740 per cent Friday. Yields move inversely to prices.

Spanish assets led gains in Europe after the country ended its 10-month leadership impasse on Sunday as Mariano Rajoy was assured of re-election as prime minister. Spain’s IBEX 35 index gained 1.3 per cent.

“It’s a mini-step forward potentially in Spain,” said David Lloyd, head of institutional fund management for fixed income at M&G Investments, but more broadly, “the issue of political uncertainty is just about everywhere you look,” he said.

European bank shares continued to perform well after a strong week, with the Euro Stoxx Banks index rising 2.7 per cent Monday. Spanish lenders were among the best performers, with shares of Banco Popular Español up 4.2 per cent and Banco Santander up 3.7 per cent.

Germany’s DAX index added 0.5 per cent and closed at its highest level of the year, while the Stoxx Europe 600 finished generally flat.

Earlier, stocks in Asia were mostly higher, led by a 1.2 per cent rise in the Shanghai Composite Index. Shares in Hong Kong climbed 1 per cent, while Japan’s Nikkei Stock Average inched up 0.3 per cent after data showed Japanese exports fell for a 12th consecutive month, but at a slower pace.

In commodities, US crude oil settled down 0.7 per cent at $US50.52 a barrel after Iraq signalled it wanted to be excluded from OPEC’s production cut plan.

Dow Jones