Europe stocks open higher as markets show positive start to the day
European stock markets opened higher on Thursday, with the Stoxx 600 index up 0.6% at 8:10 a.m. London time. Germany’s DAX gained 0.5%, while the U.K.’s FTSE 100 and France’s CAC 40 were both around 0.6% higher.
Hong Kong’s Hang Seng Index jumps 2% lifted by financials sector
Exxon’s $60 billion deal to buy shale giant is ‘one for the record books,’ says analyst
Exxon Mobil’s acquisition of shale rival Pioneer Natural Resources is the largest oil and gas merger in a decade, and “one for the record books,” says Raymond James’ managing director and equity research analyst Pavel Molchanov. On Wednesday, Exxon Mobil said it agreed to buy Pioneer Natural Resources for $59.5 billion in an all-stock deal, or $253 per share. The deal marks Exxon’s biggest since it bought Mobil, and is expected to close in the first half of 2024. While it’s a “good deal” for Exxon from a historical valuation perspective, Molchanov noted that it’s important to also recognize that Exxon’s own stock has been trading at a much lower valuation than it used to. Exxon estimated its production volume in the Permian Basin would more than double to 1.3 million barrels of oil equivalent per day. “It’s no coincidence that the Permian is the focus of his deal,” said Molchanov, elaborating how it is “the most prolific and economically attractive basins.” Pioneer shares were up 1.44% at the close, while Exxon’s slipped 3.58%.
India’s September inflation data expected to ease
India is slated to release its inflation numbers for September later Thursday, with Reuters’ analysts forecasting a 5.5% year-on-year climb. The projected reading would compare to a 6.83% rise in August, driven largely by food prices. “An easing in food and fuel inflation likely drove a softening in the headline rate,” a Barclays report dated early October forecasts. That being said, the slower inflation print may still be insufficient for India’s central bank to start trimming rates. “Even with a large step down to below 5.5%, inflation merely settles back into the upper half of the RBI’s 4+/-2% inflation target,” Mizuho’s head of economics and strategy Vishnu Varathan wrote in a daily note. He expects that the print would only provide the country’s central bank with the “comfort to hold, not cut” rates, as well as retain a “mild hawkish bias.” The Reserve Bank of India last week kept its interest rates steady at 6.5%.
More than 3 out of 4 of this year’s newly debuted stocks are trading below their IPO price
A bumper crop of companies made their initial public offerings this year, but many of them have since fallen short of their IPO price. Year to date, 88 companies have debuted on the public markets, up 37.5% from this point a year ago. However, 76% of these stocks are trading below their IPO price. That includes sandals manufacturer Birkenstock, which had an IPO price of $46 a share but ended up closing Wednesday’s trading at $40.20, a 12.6% decline. Kenvue and Instacart are also among the stocks trading below their offering price. Kenvue has tumbled 11% since it started trading, while Instacart is off nearly 17% since its debut.
Defense sector remains ‘lousy,” according to Kevin Simpson
Defense stocks have jumped this week following the outbreak of the Israel-Hamas war, with the iShares U.S. Aerospace and Defense ETF rising 5.8% week-to-date. Nonetheless, Capital Wealth Planning chief investment officer Kevin Simpson has sold off some of his Lockheed Martin shares as a result of the strength — noting that he remains bearish on the defense sector overall. “We’ve been selling Lockheed since September for relative underperformance. That’s how lousy this sector and the stock has been,” Simpson told CNBC’s “Closing Bell” on Wednesday. Simpson added that he is selling the stock on account of its underperformance compared to its relative price movement. Reducing his exposure to the defense company “speaks nothing to what happened over the weekend; [it] speaks more to the fact that I think there’s dysfunction in Washington, and it’s going to take some time for them to get maybe their act together to do what we would all hope,” said Simpson.
Stock futures inch up Thursday
U.S. stock futures opened slightly higher on Thursday night. Dow Jones Industrial Average futures gained 38 points, or 0.1%. Futures tied to the S&P 500 and Nasdaq 100 also rose 0.1%.