By Carla Mozee and Sara Sjolin, MarketWatch
Sanofi buying biotech firm for $11.6 billion
Europeans stocks pushed higher Monday, with Spanish and Greek
shares gaining in the wake of sovereign ratings upgrades and
closing at a 5-month and almost three-year highs, respectively.
What did stocks do?: The Stoxx Europe 600 index ended up 0.3% at
402.11, closing at its highest since August 2015. Last week, the
pan-European gauge rose for a third consecutive week.
Leading major benchmarks was Spain's IBEX 35 as it picked up 1%
to 10,584, moving to a level not seen since August. Greece's Athex
Composite surged 1.3% to 858.12, its strongest close since March
2015.
Germany's DAX 30 index rose 0.2% to 13,463.69, leaving the gauge
at its highest close since November. France's CAC 40 moved up 0.3%
to 5,541.99.
The U.K.'s FTSE 100 index fell 0.2% to 7,715.44.
The euro bought $1.2236, up from $1.2220 late Friday in New
York.
What's driving markets: Benchmark indexes in Spain and Greece
were standouts as investors rewarded ratings upgrades for the
countries, issued late Friday. Spain's credit rating was raised by
Fitch Ratings, which cited the country's "strong, relatively
broad-based, economic recovery" as reason for the upgrade to A-
from BBB+. The last time Spain held a Fitch rating in the "A" level
was in 2012.
Greece's rating at S&P Global Ratings was raised to B from
B-, with a positive outlook. "The upgrade reflects Greece's
steadily improving general government finances and its gradually
recovering economic prospects," wrote S&P. "Still, the size of
Greece's general government debt is an important ratings
constraint," it added.
Meanwhile, politics remained firmly in the spotlight as
investors also juggled a fresh round of corporate financial
updates, including M&A news. The euro advanced against the U.S.
dollar as the U.S. government remained in shutdown mode. Saturday's
closure came after the Republican-led Senate late Friday couldn't
reach a deal over immigration issues.
Euro strength can hurt sales of products made by European
exporters and hurt shares of those companies.
The euro had been choppy earlier after members of Germany's
center-left Social Democratic Party on Sunday voted to formally
begin coalition talks with German Chancellor Angela Merkel's
conservative party. Merkel has been trying to craft a ruling
coalition since September's election.
On tap this week is the European Central Bank's meeting on
Thursday. The euro in recent sessions has been kicked up to 3-year
highs versus the greenback on the prospect the central bank will
soon shift to a hawkish tone toward its ultraloose monetary
policy.
Read:BOJ and ECB expectations have trader hopes riding high for
the yen and the euro
(http://www.marketwatch.com/story/boj-and-ecb-expectations-have-trader-hopes-riding-high-for-the-yen-and-the-euro-2018-01-19)
What strategists are saying: "Given that only 56% of the SPD's
voted in favor of the talks, the rejection of a final coalition
deal remains a risk that's likely to keep the euro capped for now,"
said Hussein Sayed, chief market strategist at FXTM, in a note.
"The pressure on Democratic and Republican leaders to end the
standoff is intense, so market participants are watching for any
sign [of] cracks in Democrats' resolve on immigration status for
'Dreamers'. The deal on the table is only a 'stopgap' though. It
will fund spending till early February. That means a breakthrough
could be treated as hollow by markets," said Ken Odeluga, market
analyst, at City Index, in a note.
Read: Traders lack 'an appetite to take action' as shutdown runs
on--analysts react to impasse
(http://www.marketwatch.com/story/traders-lack-an-appetite-to-take-action-as-shutdown-runs-on-analysts-react-to-impasse-2018-01-22)
M&A deals: Sanofi SA (SAN.FR) fell 2.9% after the French
pharmaceuticals maker said it would acquire Bioverativ Inc
(http://www.marketwatch.com/story/sanofi-to-acquire-bioverativ-for-116-billion-2018-01-22-24852329).(BIVV)
for $11.6 billion. Bioverativ focused on therapies for hemophilia
and other rare blood disorders.
Compagnie Financière Richemont SA (CFR.EB) ended down 1.6% after
the luxury-goods company owning Cartier and Montblanc said it's
spending up to EUR2.69 billion ($3.3 billion) to buy shares in
e-commerce firm Yoox Net-a-Porter (YNAP.MI) that it doesn't already
own. Shares of Milan-based Yoox leapt 24%.
Stock movers: Ocado Group PLC (OCDO.LN) rallied 28%, with the
company saying it will develop an online-grocery business for
Canadian food retailer Sobeys Inc
(http://www.marketwatch.com/story/ocado-to-create-online-grocery-business-for-sobeys-2018-01-22).
William Hill PLC (WMH.LN) tumbled 12%, falling alongside other
bookmakers after a Sunday Times report
(https://www.thetimes.co.uk/article/2-limit-to-curb-crack-cocaine-of-gambling-ftc6v37hr)
that the U.K. government is set to limit the stake on betting shop
terminals to GBP2, down from GBP100, in an effort to curb gambling
problems.
Ladbrokes Coral Group PLC (LCL.LN) sank 7.9% and GVC Holdings
PLC (GVC.LN), which is purchasing Ladbrokes, dropped 1.2%.
"Gambling companies have made hundreds of millions of pounds a
year from fixed odds betting terminals and were hoping that the
minimum stake would be towards the middle of the GBP2 and GBP50
consultation range," said Rebecca O'Keeffe, head of investment at
Interactive Investor, in a note.
UBS Group AG (UBS) (UBS) rose 0.4%, erasing an earlier loss,
even after the Swiss bank swung to a fourth-quarter net loss of
2.22 billion francs ($2.3 billion)
(http://www.marketwatch.com/story/ubs-swings-to-loss-after-hit-from-us-tax-reform-2018-01-22-54854634),
slightly larger than a net loss of 2.15 billion francs expected by
analysts. The swing was led by a write-down of roughly 2.9 billion
francs ($3.01 billion) of deferred tax assets stemming from tax
reforms in the U.S. UBS did say it would launch a 2 billion franc
share buyback program over three years, beginning in March.
Barclays PLC (BCS) (BCS) rose 4.3% following a Financial Times
report
(https://www.ft.com/content/e768ce1e-fd54-11e7-9b32-d7d59aace167)
that U.S. hedge fund Tiger Global has invested more than GBP1
billion in the London-based lender.
In Madrid trade, Siemens Gamesa Renewable Energy SA (SGRE.MC)
tacked on 3.2%, saying a series of contracts it's signed in India
(http://www.marketwatch.com/story/siemens-gamesa-india-pacts-a-sign-of-recovery-2018-01-22)signals
a turnaround in the market after several months of weakness.
(END) Dow Jones Newswires
January 22, 2018 12:08 ET (17:08 GMT)
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