By Carla Mozee, 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, but
decliners included British bookmakers and UBS AG after the Swiss
lender swung to a quarterly loss.
What are stocks doing?: The Stoxx Europe 600 index was up 0.3%
to 402.03, hanging around its highest since August 2015, with
telecom and oil and gas shares among advancers. But tech and basic
materials shares fronted decliners. Last week, the pan-European
gauge rose for a third consecutive week.
Leading major benchmarks was Spain's IBEX 35 as it picked up
1.1% to 10,596.40, moving at levels not seen since September.
Greece's Athex Composite surged 1.3% to 858.12, around its highest
since July.
Germany's DAX 30 index was up 0.2% at 13,454.76, following
Friday's 1.2% rally that left the gauge at its highest close since
November. France's CAC 40 moved up 0.2% to 5,536.90.
The U.K.'s FTSE 100 index was down 0.1% at 7,721.65.
The euro bought $1.2254, up from $1.2220 late Friday in New
York.
What's driving markets: Benchmark indexes in Spain and Greece
were standouts, bulking up more than 1% each 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.
From the corporate front, UBS said it will take a roughly charge
of nearly 3 billion Swiss francs stemming from the U.S. tax
overhaul. Shares of the firm fell Monday.
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 ultra-loose monetary
policy.
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
stand-off is intense, so market participants are watching for any
sign cracks in Democrats' resolve on immigration status for
'Dreamers'. The deal on the table is only a 'stop gap' 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.
M&A deals: Sanofi SA (SAN.FR) fell 2.9% after the French
pharmaceuticals maker said it will 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) was down 1.9% after
the luxury-goods company being 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 30%, 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 8% 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.
Shares of Paddy Power Betfair PLC was off 1%.
UBS (UBS) fell 0.3% 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) rose 4% 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%, 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 11:11 ET (16:11 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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