General Electric Co. (GE, -1.42) is making some big changes and this multinational conglomerate is about to make one of the biggest deals of 2015 in the Asia-Pacific region. A recent report has stated that GE will be selling GE Capital in New Zealand and Australia which is a consumer lending business. The buyers are Deutsche Bank AG and KKR & Co., which is an investor group, as well as Värde Partners which is a $10 billion alternative-investment firm. The deal is said to be valued at over $6 billion and no additional details of the deal have been released yet. This recent deal comes after General Electric sold its other global banking businesses after investors put pressure on the conglomerate to stop diluting their focus and to rather go back to their industrial specialties such as CT scanners, power turbines and jet engines. Shareholders are still penalizing General Electric for entering a finance business which was risky enough to almost topple the company during the global financial crisis. This then prompted GE to cut back on its financial arm by selling billions of dollars’ worth of commercial real estate assets to international banks. Unfortunately, the stocks of GE have remained under the $30 mark and the company has even unperformed against other companies who do not have lending operations.
In U.S trading on Friday, stocks recorded the biggest gain in more than a month. This came as investors ignored the poor data on retail sales as expectations for a rate hike became the main focus. Data showed that monthly sales at retailers in the U.S. declined for the 3rd month in a row which prompted questions regarding the ability of consumers to maintain the economic engine in the country. Despite lower energy prices, U.S. consumers are clearly not spending. Also, with poor retail sales, investors now hope that this will prompt the Fed to delay interest rate hikes. As a result, the Dow Jones and the S&P 500 were pushed back into positive territory. At the close of trading, the Dow Jones Industrial Average (DJIA) advanced 1.5%, or 259.83 points, to 17,895.22 while the S&P 500 index (SPX) advanced 1.3%, or 25.71 points, at 2,065.95. Following the upward trend was the Nasdaq Composite index (COMP) which climbed up 0.9%, or 43.35 points, at 4,893.29.
The euro (EUR) is taking a beating and Goldman Sachs has now stepped in and called for euro-dollar parity within 6 months. Last week Friday, the U.S. Dollar Index surged ending above the one hundred level for the 1st time since March 2003. The greenback’s relative value against the EUR comprises more than half of the index’s value. On the same day, the EUR lost 3 percent against the greenback which has been experiencing a rally for the last 8 months. This has now occurred for the 2nd week in a row. The USD has climbed despite weaker-than-expected economic data out of the U.S. such as poor retail sales which has now declined for the 3rd month in a row. Investors are now turning to the meeting scheduled for Wednesday this week when the Federal Reserve will make its monetary policy statement. The big question is will the central bank remove the word ‘patient’ regarding the timeline for interest rate hikes? If yes, this could be a clear indication that interest rates will be raised by as early as June this year. In currency trading on Friday, the EUR/USD traded at $1.0465 marking its weakest level since the beginning of 2003. Meanwhile on Thursday, the euro traded at $1.0634 against the USD.
In Asian trading on Monday, the prices of crude oil declined sharply as the global supply glut weighed on investor sentiment. This came after the International Energy Agency released a bearish report on Friday on the supply and demand of global oil which pushed crude oil prices to a 6-week low. Crude oil for delivery in April traded at $46.03 a barrel on Monday, down 2.19% on the NYMEX. Meanwhile, Brent crude oil for April delivery traded at $54.57 a barrel on Friday on the ICE Futures Exchange in London, down 4.22% or $2.41.