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DAILY MARKET REVIEW: 01 JUNE 2015

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Daily Market Review on STOCK.com

DAILY MARKET REVIEW: 01 JUNE 2015

Jun 01 2015, 07.36am GMT

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STOCK.com   Stocks

Persistence seems to work and after many attempts, it seems that Intel Corp. (INTC, +1.32) is one step closer to purchasing Altera Corp. (ALTR, +4.00%). On Monday, Intel is expected to announce its acquisition worth $17 billion which will now enable the chip maker to defend its key business and to boost its revenue. While Altera rejected the offer in April this year, a new round of negotiations seems to have closed the deal while Altera stockholders are expected to receive about $54 a share. This price is 56 percent higher than the price Altera was trading at, at the time that information regarding negotiations between the 2 companies started at the end of March this year. On Friday last week, the shares of Altera traded at $48.85. With chip makers finding it hard to boost profitability and to grow revenue on their own, Intel’s interests in Altera is a clear indication that the company is trying to make its stand in the semiconductor industry. This was evident on Thursday when Avago Technologies Ltd. (AVGO, +4.00%) announced a deal to buy Broadcom Corp., (BRCM, +1.07%). This deal is valued at $37 billion which marks the biggest technology acquisition on record. Altera and Intel have been working closely together already with Intel producing high-end semiconductors for Altera. While Altera does design chips, these chips are not produced in-house. With the purchase of Altera, Intel is hoping to use the company’s line of programmable chips in order to boost revenue growth as a result of the declining demand of personal-computer chips. Intel is currently trading at $34.46 a share.

STOCK.com   Indices

While stocks in the U.S. declined on Friday after various weak economic reports, they finished the week with modest losses, yet for the month of May, the main indices recorded a 2nd straight month of gains. For the month, the Dow Jones Industrial Average (DJIA) and the S&P 500 index (SPX) gained about 1 percent each. At the close of trading on Friday, the DJIA closed down 0.6%, or 115.44 points, to 18,010.68. For the week, the blue chip index was 1.2% lower. Also, the SPX closed on Friday down 0.6%, or 13.40 points, to 2,107.39. For the week, the index lost 0.9% with losses evident in all the sectors. Meanwhile, the Nasdaq Composite index (COMP) ended Friday’s session down 0.6%, or 27.95 points, at 5,032. For the week, the tech heavy index posted a loss of 0.4 percent while for the month, the index gained 2.6%.

STOCK.com   Currencies

In currency trading on Friday, the U.S. dollar (USD) traded lower. This came after mixed economic reports were released out of the US which promoted concerns regarding the strength of the economy. In their report, the Bureau of Economic Analysis said that for the first 3 months of 2015, the GDP (gross domestic product) declined 0.7 percent. This beat expectations for a decline of 0.8% while in the last quarter of 2014, the GDP grew 0.02%. In a separate report, the University of Michigan said that its consumer sentiment index rose from 88.6 in April to 90.7 in May, beating expectations for an increase to 89.9. Added to this, the University’s inflation expectations declined from 2.9% in April to 2.8% in May for the next 12 months. The Chicago PMI (purchasing managers' index) also dropped in May to 46.2 after reaching 52.3 in April. The EUR/USD traded at 1.0980, up 0.31% while the USD/JPY traded at 123.85, down 0.08%. Against the British pound and the New Zealand dollar, the greenback traded higher with GBP/USD down 0.28% to 1.5275, while NZD/USD dropped 0.84% to trade at 0.7117.

STOCK.com   Commodities

On Monday, in early morning Asian trade, crude oil prices declined. Energy traders have now turned their attention to the OPEC meeting which will take place in Vienna. All eyes will be on the oil cartel which is expected to maintain production levels at a steady rate of above 30 million barrels per day. This comes despite a global supply glut of the commodity. WTI crude oil for delivery in July traded at $59.80 a barrel, down 0.82% on the NYMEX. Meanwhile on Friday, Brent crude oil for delivery in July traded at $65.56 a barrel, up 4.76%, or $2.98, on the ICE Futures Exchange in London.

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