December 12, 2017
Wednesday, April 8, 2015

Wall Street ends with modest gains after Fed minutes

US stocks ended a volatile session with modest gains today after minutes from a US Federal Reserve meeting indicated that the central bank remained on track for a interest rate hike this year.

Major indexes moved between negative territory and session highs after the news as traders parsed the minutes for clues as to when the first rise could occur. Some Fed participants went on record saying they expected upcoming economic data would warrant an initial rate increase in June, while others anticipated a hike later in 2015 due to recent strength in the US dollar.

Market participants had been expecting the first rate hike to come in September or later, with last week's much weaker-than-expected March payroll report pointing to slowing growth. The central bank has said it would only raise rates when data suggests the economy is strong enough to withstand it.

Fed officials acknowledged risks from overseas and a weak start to the year at their March meeting but remained confident in the strength of the recovery, the minutes showed.

Markets were supported boosted by merger activity in the healthcare sector, though the energy sector was weak as crude oil plunged.

Mylan jumped 14.8 percent to $68.36 after the generic drugmaker offered to buy Perrigo Co for about $29 billion in cash and stock. Perrigo jumped 18.4 percent to $195. The two companies were the biggest percentage gainers on the S&P 500.

US crude futures dropped 6.6 percent to settle at $50.42 a barrel after US Energy Information Administration data showed the largest weekly build in oil inventories since March 2001. The news offset Royal Dutch Shell's $70 billion bid for rival BG Group.

The S&P Energy index fell 1 percent while Exxon Mobil lost 2 percent to $84.06 and Chevron Corp shed 1.7 percent to $106.66.

The Dow Jones industrial average rose 27.09 points, or 0.15 percent, to 17,902.51, the S&P 500 gained 5.57 points, or 0.27 percent, to 2,081.9 and the Nasdaq Composite added 40.59 points, or 0.83 percent, to 4,950.82.

In Europe, energy shares outperformed other sectors after Royal Dutch Shell's $70 billion bid for BG sparked a rally.

The STOXX Europe 600 Oil & Gas Index, hammered over the past year as oil prices tumbled, closed up 2.5 percent to outperform the pan-European FTSEurofirst 300 index which ended flat at 1,611.68 points.

BG shares jumped 26.7 percent, Tullow Oil climbed 4.4 percent and BP gained 0.5 percent. Royal Dutch Shell fell 5.3 percent, reflecting the premium it is paying for BG.

Germany's DAX, which hit a record high of 12,219.05 points last month, fell 0.7 percent to 12,035.86 points, pulled down by auto stocks. These have risen sharply this year but gave up some of their gains on Wednesday after a number of brokers raised doubts about valuation ratios.

BMW fell 1.4 percent while Daimler retreated 1.3 percent.

The Greek stock market also fell 1.2 percent, which traders attributed to nervousness the day before a deadline for Greece to repay a loan to the International Monetary Fund.

However, investors said the backdrop of a pick-up in mergers and acquisitions (M&A) would allow European stock markets to remain near multi-year highs while traders anticipated solid first-quarter results from European companies.

First-quarter earnings for the pan-European STOXX 600 index are projected to rise 0.4 percent from a year ago, according to Thomson Reuters data.

Shell's move for BG came a day after FedEx's 4.4 billion-euro ($4.8 billion) bid for Dutch package delivery firm TNT Express sparked a rally in that sector.

Shares in Swiss bank Julius Baer also touched a record high as traders cited speculation of a possible bid for Baer by Credit Suisse. Credit Suisse and Baer declined to comment.

Meanwhile, Tokyo's benchmark index hit a 15-year high after Japanese retail investors ploughed a sizable amount of cash into new stock mutual funds and as regional bourses appeared to benefit from rotation of funds out of US equities.

Retailers and other domestic-demand oriented shares led the gains, with department store operator Takashimaya erasing earlier losses to gain sharply despite reporting modest earnings.

The Nikkei rose 0.8 percent to 19,789.81, closing at its highest level since April 2000, even as Wall Street shares posted small losses the previous day.

The Nikkei has gained 3.0 percent so far this month, helped by the launch of two new equity investment trusts this week, which drew about 160 billion yen ($1.3 billion) from investors in total.

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