Dow +0.61% S&P +0.53% Nasdaq +0.24% Russell+0.75%
US Market closed higher helped by a leg up on oil on report of that OPEC reached aproduction cap agreement. Oil ticked lower following the EIA data, falling to the $44.50/bbl price level. energy component staged a reversal shortly after midday as Reuters reported that OPEC agreed to lower its production to 32.5 million barrels per day from approximately 33.2 million barrels. However, the reduction will not go into effect until OPEC meets on November 30. Nevertheless, WTI crude rallied into its pit close, finishing higher by 5.4% ($47.07/bbl; +$2.40). Eight sectors ended in the green with industrials (+0.7%), materials (+1.0%), and energy (+4.3%) leading the pack. Conversely, countercyclical health care (-0.1%), utilities (-0.3%), and telecom services (-1.0%) lagged. financials underperformed on yellen comments on cap.requirement. volume were slighlty above average with 903 mil shares. OPEC officials said to confirm a production cut, limiting output to 32.5-33M bpd range; Setting a committee to decide on level of cut for each member with final decision in November; Saudi Arabia's deteriorating fiscal conditions said to trigger the surprise concession. JPY sold off across the board on risk-appetite as worries over high-yield debt recede. China Commerce Ministry notes increasing downward pressure on trade.
Nikkei +1.65% Hang Seng +0.24% CSI +0.53% Shanghai +0.46%
Eur$ 1.1225 CNH 6.6826 CNY 6.6708 JPY 101.67 GBP 1.3017 CHF 0.9718 RUB 62.9825 WTI$ 47.17 (+0.26%)
S&P +0.16% EuroStoxx +1.21% FTSE +1.02% DAX +1.12% SMI +0.79%
Macro :
- OPEC Said to Agree on Oil Output Limit of 32.5m B/D in Algiers
- Fed's Evans says could raise rates if more fiscal policies to support growth were formed; sees some frothiness in asset valuations
- Spotify Said in Advanced Talks to Buy Soundcloud: FT - http://on.ft.com/2d8GTEq
- Fed’s Mester: Sometimes Being ‘Prudent’ Means Hiking Rates
Keep an eye on :
- ABE SM : Abertis Weighs Buying CDC’s 15% Stake in Sanef: Expansion
- AB1 GY : Air Berlin to Restructure, Laying Off Up to 1,200 Employees
- ATLN VX : Actelion to Investigate All-Oral Combo Therapy for Relapsing MS
- AIR FP : U.S. Clears Boeing Fighter Jet Sales To Middle East
- AIR FP : Bombardier CEO: Current Profit Is Insufficient to Pay Down Debt
- BAYN GY : Bayer Says Safety Data on Xarelto Disclosed Properly
- BKIA SM : Spain Studies Merger of Nationalized Lenders Bankia, BMN
- CBK GY : Commerzbank to Cut About 10,000 Jobs: Bild
- COLR BB : Colruyt Doesn’t Rule Out Resuming Opportunistic Stock Buybacks
- CSGN VX : Credit Suisse, Barclays Said to Be in Mortgage-Settlement Talks
- DBK GY : Deutsche Bank Has No Reason to Sell Polish Unit: Niemycki in DGP
- ENEL IM : Enel Signs Accord to Sell Marcinelle Energie to Direct Energie
- ERICB SS : Ericsson’s Largest Owners Evaluating Ownership Options: SVD
- GPLG NA : Galapagos, MorphoSys Start Dosing MOR106 in Atopic Dermatitis
- GSK LN : Glaxo to Sell Its Remaining 6.2% Stake in Aspen Pharmacare
- INGA NA : ING Sells 46.7m Shares,Cuts Kotak Mahindra Bank Stake to 3.9%
- NOKIA FH : Sprint CFO Sees Network Spending Less Than $3b Target
- NYR BB : Nyrstar Sees EU3-5m Ebitda Impact From Port Pirie Smelter Outage
- OHL SM : OHL Buys Back EU23.3M of Principal of 2020 Bonds
- UG FP : PSA Plans to Sell First Fully Autonomous Vehicle in 2021: L’Obs
- PLUS LN : Plus500 Founders Selling 15.5m Shares in Placing
- SAN FP : Sanofi Faces Class Action in France From Depakine Users: Echos
- SU FP : Schneider Said to Hire JPMorgan to Explore Sale of DTN Service
- STL NO :Statoil Brazil Looking at Subsalt Polygon Opportunities: Reuters
- RIG US : Transocean Holder Icahn Cut Stake to 1.5% for Tax Purposes
- VOW3 GY : Volkswagen Annoints Mobility Services Unit as Group’s 13th Brand
- VOW3 GY : VW CEO Mueller Says He ‘Would Love’ a DOJ Settlement by End Year
Spotify in advanced talks to buy SoundCloud
Spotify, the music streaming service, is in advanced talks to acquire SoundCloud, as competition heats up with Apple for the future of digital music, said people briefed on the discussions.
SoundCloud, which raised $100m in June from a group of investors including Twitter, was last valued at about $700m.
Those briefed about the talks said it was unclear how much Spotify would pay for the Berlin-based company, as they warned that the discussions could still collapse.
A deal between Spotify and SoundCloud, two of Europe’s top tech start-ups, comes as Silicon Valley titans such as Apple and Amazon have recently launched their own music streaming services, forcing independent players to consolidate to survive.
Spotify this month hit 40m paying subscribers a week after Apple Music announced its service had grown to 17m subscribers.
Spotify declined to comment, while SoundCloud could not be immediately reached.
Despite boasting a 200m-strong creative community and 135m tracks, with remixes and new artists coveted by competitors, SoundCloud has never turned a profit.
In 2014, it reported a turnover of €17.4m and an operating loss of €39m. The start-up has not reported user numbers or business health since then.
People close to Spotify management said SoundCloud was viewed as a threat as long as it was considering offering a cheaper, mid-tier subscription service. But when it abandoned those plans, going instead for a standard $9.99 option known as SoundCloud Go earlier this year, it lost its best chance of independent success.
“They’ve been absolutely dobbed by all the pressure from the labels to go in for a cookie-cutter subscription service which doesn’t fit their user base, content or catalogue. It’s an artefact ultimately,” said analyst Mark Mulligan, founder of Midea Research.
Spotify had “reasonably detailed” talks with SoundCloud last spring about a possible acquisition, but balked at its asking price, said people familiar with the matter. After its Twitter investment, Spotify considered the acquisition again, although talks fell apart after a brief round of negotiations, the people said.
Spotify is getting its ducks in a row for an IPO in the next year, by boosting its paid subscriber base and diversifying content through video and podcasts.
Soundcloud’s biggest strength is the community of creators who built it, with an extensive catalogue of music, such as mixes, hip hop, EDM and DJ sets.
Independent digital music companies are flailing, despite music revenues growing for the first time in nearly two decades, boosted by a 45.2 per cent rise in streaming revenues.
“The big question for the streaming market is whether you can be a standalone company in a category when you have companies like Amazon and Apple looking at music as a loss leader, just to sell more iPhones or Echo speakers,” said Niklas Zennstrom, co-founder of Skype and now-defunct music service Rdio, which was acquired by Pandora last year.
It also draws users into a social network, allowing them to upload and share music instantly. “With Soundcloud’s subscription service, the two services are becoming more similar than they have been before, so a reason [to buy] would be a consolidation of subscriber bases and to combine talent pool,” said Mr Zennstrom.
In an interview on Swedish television, Spotify chief executive Daniel Ek mirrored this reasoning. “The next decade for us is very much about ensuring that even more of these artists can live on their music, and bringing them together with a new audience,” he said. “Today our users say ‘introduce me to new music’. What the artists say is ‘help me finding my audience’. Essentially, that’s two sides of the same coin.”
Rich Greenfield, analyst with BTIG Research, said: “Spotify buying SoundCloud could be a sign they are trying to extend their significant lead in online music, as Apple, Google and Amazon are gearing up to compete more aggressively in music. The next question will be, is Pandora going to be left out and forgotten.”
>>> Up
*ANGLO AMERICAN RAISED TO SECTOR PERFORM AT CIBC
*COFACE RAISED TO OVERWEIGHT AT JPMORGAN
*COTY INC RAISED TO NEUTRAL AT B. RILEY
*HUDBAY MINERALS RAISED TO OUTPERFORM AT BMO CAPITAL MARKETS
*KRONES RAISED TO BUY AT HSBC
*REX ENERGY CORP RAISED TO HOLD AT STIFEL
*RIO TINTO RAISED TO SECTOR OUTPERFORM AT CIBC
>>> Down
*ADO PROPERTIES CUT TO EQUALWEIGHT VS OVERWEIGHT AT BARCLAYS
*BOLIDEN CUT TO MARKET PERFORM AT BMO CAPITAL MARKETS
*GN STORE NORD CUT TO HOLD AT KEPLER CHEUVREUX
*HAPAG-LLOYD CUT TO REDUCE VS HOLD AT HSBC
*KONE CUT TO HOLD AT NORDEA
*TAKKT CUT TO HOLD VS BUY AT BERENBERG
*TOPDANMARK CUT TO ’SECTOR PERFORM’ AT RBC CAPITAL
>>> PT Change
>>> Initiation
*COMPUTACENTER RATED NEW HOLD AT BERENBERG, PT 750P
*UTILITYWISE RATED NEW OUTPERFORM AT MACQUARIE, PT 180P
*XLMEDIA RATED NEW BUY AT BERENBERG, PT 130P
>>> Call
Asia Mid-Session Market Update: First OPEC output cut in 8 years sends energy stocks, commodity FX higher
***Asia Notes/Observations***
- OPEC officials said to confirm a production cut, limiting output to 32.5-33M bpd range; Setting a committee to decide on level of cut for each member with final decision in November; Saudi Arabia's deteriorating fiscal conditions said to trigger the surprise concession.
- Rally in energy sector sends Australia's S&P/ASX200 to 4-week highs; AUD/USD hits 3-weeks highs above 0.77.
- JPY sold off across the board on risk-appetite as worries over high-yield debt recede.
- Australia job vacancies reach 4-year high as labor market recovery continues.
- China Commerce Ministry notes increasing downward pressure on trade.
***Top US session headlines***
- OPEC reportedly reaches deal in Algiers to limit oil production, execution of deal in Nov - press
- (US) AUG PRELIMINARY DURABLE GOODS ORDERS: 0.0% V -1.5%E; DURABLES EX TRANSPORTATION: -0.4% V -0.5%E
- (EU) ECB's Draghi: what we need now is to allow our measures to develop their full impact - speaks from German Parliament
- BOE's Shafik expects more stimulus at some point
- DB: German government reportedly working on a contingency plan for Deutsche Bank; subsequently walked back by other reports
***US markets on close: Dow +0.6%, S&P500 +0.5%, Nasdaq +0.2%***
- Best Sector in S&P500: Basic Materials (Energy)
- Worst Sector in S&P500: Utilities / Healthcare
- Biggest gainers: MUR +11.3%, NOV +8.5%, CHK +8.4%, DVN +8.3%, MRO +8.0%
- Biggest losers: PAYX -4.6%, NKE -3.8%, LEG -3.6%, MU -3.1%, LB -2.9%
***VIX 12.39 (-0.7pts); Treasuries: 2-yr 0.77% (+1bp), 10-yr 1.57% (+1bp), 30-yr 2.29% (+1bp)***
***US movers afterhours***
- AEGR +39.8%; Juxtapid (lomitapide) capsules approved in Japan for the treatment of homozygous familial hypercholesterolemia (HoFH)
- PTX +8.5%; Announces distribution of TREXIMET 10/60 mg (sumatriptan 10mg and naproxen sodium 60 mg) dose for use in pediatric patients
- PIR +8.9%; Reports Q2 -$0.05 v -$0.05e, R$405.8M v $409Me
- SCHN +2.2%; Reports prelim Q4 $0.56-0.60* v $0.31 y/y
- PRGS -9.7%; Reports Q3 $0.44 v $0.45e, R$102.4M v $104Me; Narrows lower FY16 $1.57-1.60 v $1.61e, R$412-415M v $413Me (prior $1.57-1.63, R$412-418M)
- ATNM -16.5%; Offering of indeterminate amount of Common Stock
- ITCI -67.9%; Announces top-line results from second Phase 3 trial of ITI-007 in patients with Schizophrenia (Study 302); neither dose separated from placebo on the primary endpoint
***Equity Futures (00:30ET): S&P e-mini +0.2%, Dax +0.2%, FTSE100 +0.2%***
***FX / Commodities ranges (00:30ET):***
- EUR 1.1215-1.1235; JPY 100.65-101.40; AUD 0.7685-0.7710, NZD 0.7270-0.7300
- Gold +0.4% at 1,328/oz; Oil -0.2% at $49.98/brl; Copper +0.8% at $2.20/lb
- SLV: iShares Silver Trust ETF daily holdings rise to 11,287 tonnes from 11,337 tonnes prior; first decline since Sept 12
***Asian Equity Markets (00:30ET)***
- Nikkei +1.5%, Hang Seng +0.5%, ASX +1.1%, Shanghai +0.6%, Kospi +0.8%
***Key economic data:***
- (JP) JAPAN AUG RETAIL SALES M/M: -1.1% V -0.6%E; RETAIL TRADE Y/Y: -2.1% V -1.7%E
- (AU) AUSTRALIA JUN-AUG SKILLED VACANCIES Q/Q: +4.6% V -2.1% PRIOR; Total vacancies 177.3K (4-year high)
- (KR) SOUTH KOREA AUG DEPARTMENT STORE SALES Y/Y: 4.1% V 7.0% PRIOR; DISCOUNT STORE SALES Y/Y: -1.3% V 2.1% PRIOR
- (KR) South Korea Sept Consumer Confidence: 101.7 v 101.8 prior
***Speakers / Press / Key Themes***
China:
- (CN) Wealthy China investors said to flock to bank issued securities promising yields of as high as 15% - China Daily
- (CN) China Commerce Ministry Official Zhang Ji: Downward pressure on China's trade is increasing due to a variety of destabilizing factors
- (CN) According to a private survey, China economy in Q3 is not as healthy as official data suggests - Chinese press
- (CN) PBoC academic Wang Yong calls for credit policy and tax management for property sector - Chinese press
- (CN) Deutsche Bank maintains FY17 China GDP target at 6.5%, but assumes "significant policy easing including interest rate cut in Q2" - financial press
Japan:
- (JP) Japan PM Abe: Trusts in BOJ Gov Kuroda, Japan is one step away from overcoming deflation
- (JP) Japan Deputy Chief Cabinet Sec Hagiuda: Want to assess the impact of OPEC deal on oil prices
- (JP) Implied average for Japan's overnight index swaps (OIS) over next 12 months has fallen to -0.2%, implying expectations of BOJ having to cut interest rates deeper into the red - Nikkei
- (JP) Japan Council on Economic and Fiscal Policy: Wage hikes should have the key role in Japan achieving 2% inflation target - Nikkei
Australia:
- (AU) Australia PM Turnbull: Energy security needs to be a key priority; Heavy reliance on renewables places strain on grids - financial press
***Asia movers***
Notable movers by sector:
- Consumer discretionary: Quali-Smart Holdings 1348.HK +1.5% (profit warning); Belle International Holdings 1880.HK +0.9% (disposal of shares in Baroque Japan)
- Financials: Programmed Maintenance Services PRG.AU -15.0% (cuts guidance)
- Industrials: Hitachi 6501.JP +2.6%, Mitsubishi Heavy Industries 7011.JP +2.5% (speculation for nuclear fuel business merge)
- Technology: Samsung Electronics 005930.KR +3.0% (partnership with SAP)
- Materials: Tokuyama Corp 4043.JP +15.7% (to sell Tokuyama Malaysia to OCI; Credit Suisse raised to neutral); BHP BHP.AU +4.9%; Marubeni Corp 8002.JP +3.5% (OPEC agrees to cut production)
- Energy: CNOOC 883.HK +5.9%, Inpex Corp 1605.JP +6.6%, Beach Energy BPT.AU +12.5%, Santos STO.AU +7.5%, Origin Energy ORG.AU +8.0%, Woodside Petroleum WPL.AU +7.5% (OPEC agrees to cut production); China Shenhua Energy Co 1088.HK +4.6% (China to add coal production)
After Hours Summary: PIR +8%, SCHN +2% following earnings/guidance, AEGR +36.5% on Juxtapid Japan approval... PRGS -10% following earnings/guidance/CFO news, ITCI -67% after trial failed to meet primary endpointAfter Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: PIR +8.2%, SCHN +2.2%
Companies trading higher in after hours in reaction to news: AEGR +36.5% (announces Juxtapid capsules approved in Japan for the treatment of homozygous familial hypercholesterolemia), EBIO +1.7% (modestly higher after 10% owner / Director Leslie Dan filed 13D confirming 14.8% active stake), HIMX +1.4% (initiated with Buy ratings at Roth Capital), IBKR +0.6% (Bloomberg reporting that Scottrade is exploring a sale), SRPT +0.5% (ticking higher, announces first patient dosed in Phase III clinical trial of SRP-4045 and SRP-4053 for the treatment of Duchenne Muscular Dystrophy Amenable to Exon 45 or 53 skipping), AMTD +0.4% (higher in after hours on Bloomberg report that the company may be interested in acquiring Scottrade), AMGN +0.4% (light volume; announces erenumab 'significantly reduces' monthly migraine days in patients with episodic migraine in first phase 3 study), AMBA +0.3% (ticking higher - initiated with Buy ratings at Roth Capital)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: PRGS -9.9% (also appoints Kurt Abkemeier as CFO succeeding Chris Perkins; initiates quarterly dividend)
Companies trading lower in after hours in reaction to news: ITCI -67.2% (announces top-line results from the second Phase 3 Trial of ITI-007 in patients with Schizophrenia), ATNM -14.7% (announces an underwritten public offering of common stock), MSON -4.5% (thinly traded - notified SEC/DoJ that it may have had knowledge of certain business practices of independent Chinese entity that distributes its products, which practices raise questions under FCPA), NSPR -3.7% (announces a 1-for-25 reverse split of its common stock), ALNY -2.2% (presents clinical and non-clinical data demonstrating continued rnai platform optimization and leadership in the development of RNA-based therapeutics at 12th annual meeting of the Oligonucleotide Therapeutics Society), DTE -1.2% (announces 12 mln equity units offering), VRTX -0.4% (confirms FDA approval of Orkambi for use in children with cystic fibrosis ages 6 through 11 who have 2 copies of the F508del mutation; lowers FY16 Orkambi rev guidance), RIG -0.2% (light volume - Carl Icahn confirms lowered active stake to 1.5%)
Closing Market Summary: OPEC Rallies Oil While Stocks Drift HigherThe major averages ended the midweek affair on a higher note as a leg higher in crude oil boosted risk appetite in the broader market. The energy component rallied in afternoon trade amid reports that OPEC reached a production cap agreement. The Dow Jones Industrial Average (+0.6%) finished ahead of the S&P 500 (+0.5%) and the Nasdaq Composite (+0.2%).
Equity indices began the day on a choppy note as volatility from the oil pit weighed on the broader market. Crude oil was in focus as a negative reading of the Department of Energy's weekly inventory report weighed on the energy component. The EIA reported that crude oil stockpiles fell by 1.88 million barrels (consensus: +2.99 million) while gasoline inventories rose by 2.02 million barrels (consensus: +0.17 million). Oil ticked lower following the data, falling to the $44.50/bbl price level.
The energy component staged a reversal shortly after midday as Reuters reported that OPEC agreed to lower its production to 32.5 million barrels per day from approximately 33.2 million barrels. However, the reduction will not go into effect until OPEC meets on November 30. Nevertheless, WTI crude rallied into its pit close, finishing higher by 5.4% ($47.07/bbl; +$2.40).
The rebound in oil boosted risk appetite as heavily-weighted consumer discretionary (+0.3%), technology (+0.3%), and financials (+0.5%) each erased modest losses. The benchmark index finished at its best level of the day, testing technical resistance near the 2168/2173 price level. Eight sectors ended in the green with industrials (+0.7%), materials (+1.0%), and energy (+4.3%) leading the pack. Conversely, countercyclical health care (-0.1%), utilities (-0.3%), and telecom services (-1.0%) lagged.
The heavily-weighted financial sector (+0.5%) finished behind the broader market as participants responded to commentary from Federal Reserve Chair Janet Yellen. Chair Yellen testified before the House Financial Services Committee today, keeping the majority of her remarks centered on regulatory policies. Ms. Yellen indicated that the Fed is exploring stricter capital requirements for Global Systemically Important Banks (GSIBs) while also looking to lower regulatory requirements for community banks. The commentary initially spurred some risk aversion among GSIBs, but the group recovered before the close. JPMorgan Chase (JPM 66.71, +0.35) and Citigroup (C 46.87, 0.50) finished higher by 0.5% and 1.1%, respectively. Separately, Wells Fargo (WFC 45.31, +0.22) finished in-line with the sector despite reports that the California State Treasurer sanctioned the bank for prior sales practices.
Biotechnology underperformed in the health care space (-0.1%), evidenced by the 0.8% decline in the iShares Nasdaq Biotechnology ETF (IBB 295.08, -2.40). In the ETF, Mylan Labs (MYL 40.22, -1.09) fel 2.6% after the company indicated in the prior session that that there may be discrepancies between EpiPen profit data and previous information provided to Congress on the profitability of the device. The EpiPen manufacturer remains in the spotlight following the recent drug pricing controversy. The biotechnology ETF narrowed its monthly gain to 5.1%, which compares to a gain of 0.2% in the broader sector.
In the consumer discretionary space (+0.3%), media names outperformed after reports indicated that Sumner Redstone's National Amusements is pushing for Viacom (VIAB 36.56, +1.09) and CBS (CBS 54.15, +2.10) to hold merger talks. Conversely, retail names underperform as the SPDR S&P Retail ETF (XRT 43.31, -0.28) ended lower by 0.6%. Dow component Nike (NKE 53.25, -2.09) finished lower by 3.8% after the company's futures orders and gross margins came in below consensus.
Treasuries ended on a lower note with yields rising through the curve. The yield on the 10-yr note finished higher by one basis point at 1.57%.
Today's participation was above the recent average as more than 903 million shares changed hands on the NYSE floor.
Today's economic data included the weekly MBA Mortgage Index and the Durable Goods Orders report for August:
- The MBA Mortgage Index indicated that mortgage applications declined 0.7% in the week ending September 24. This followed a 7.3% decline in the prior week.
- Total durable goods orders were unchanged in August (consensus -1.9%), which was better than expected, while orders excluding transportation were down 0.4%, as expected.
- Total orders growth for July was revised down to 3.6% from 4.4% while growth in orders excluding transportation was also revised down to 1.1% from 1.5%.
Tomorrow's economic data will include the third estimate of second quarter GDP (consensus 1.3%), the third estimate for the second quarter GDP deflator (consensus 2.3%), weekly initial claims (consensus 259k), and International Trade in Goods for August, which will each cross the wires at 8:30 ET. Separately, Pending Home Sales for August (consensus 1.0%) will be released at 10:00 ET.
- Russell 2000: +10.5% YTD
- S&P 500: +6.2% YTD
- Nasdaq: +6.2% YTD
- Dow Jones: +5.3% YTD
RTRS - U.S. SEC SAYS IT CHARGES ANHEUSER-BUSCH WITH VIOLATING FCPA AND WHISTLEBLOWER PROTECTION LAWS