Market update: M&A activity provides market boost – 29.07.2013

Source: Henderson Global Investors

US stocks rose marginally on Friday (S&P 500 +0.1%; Dow Jones +0.02%), ending the week roughly flat. Earnings continued to provide support, not being as bad as some analysts had feared. Coffee chain Starbucks (+7.6%) reported a larger-than-anticipated rise in quarterly profits, helped by outstanding sales in China. Optimism that the Federal Reserve (Fed) would keep its monetary policy accommodative for some time was also a factor behind the stock market’s rise. The White House has said that president Obama is not expected to name a new Fed chairman until the Autumn, lowering expectations of an imminent announcement, which could have been a destabilising influence.

Overnight, the Hang Seng Index has dipped 0.5%, led lower by the materials and financials sectors as concerns about the Chinese economy weighed on sentiment; industrial companies have reported slower profits growth, while the government has ordered an audit of state borrowings. In Europe, the FTSE Eurofirst 300 is up 0.1% at the time of writing (FTSE All-Share +0.1%), boosted by signs of increased mergers & acquisitions activity. A US$35bn merger deal was announced between media firms Publicis and Omnicom over the weekend, while it emerged today that US drugmaker Perrigo has agreed to buy Elan for $8.6bn.