(Boursier.com) — Wall Street rallied on Monday, awaiting inflation figures and the Fed’s monetary decision… The S&P 500 recovered 1.43% to 3,990 pts, the Dow Jones gained 1.58% to 34,005 pts, while the Nasdaq rose 1.26% to 11,143 pts. On the Nymex, a barrel of WTI crude rebounded 4% to $74. The dollar index is stabilizing against a basket of currencies, the euro settling at 1.05/$. A few mergers and acquisitions transactions enlivened the session, in particular the agreement of more than 26 billion dollars for the acquisition of Horizon Therapeutics by Amgen.
The economic news of the day, on the other hand, was relatively limited. The two major events of the week are inflation and the Fed’s monetary meeting. The US consumer price index for the month of November will be released tomorrow at 2:30 p.m. (consensus +0.3% compared to the previous month and +7.3% over one year; +0.3% and +6, 1% excluding food and energy).
The Fed meeting will be held on Tuesday and Wednesday. According to the CME Group’s FedWatch tool, the current probability of a 50 basis point rate hike on Wednesday is 77%, compared to a 23% probability of a strong move of 75 basis points. Remember that the rate of ‘fed funds’ is currently housed between 3.75 and 4%, after four consecutive rate increases of 75 basis points to fight against inflation.
After the fastest tightening of US monetary policy since the 1980s, the central bank is therefore expected to raise its benchmark rate on Wednesday to a range of 4.25% to 4.5%, the highest level since 2007. The Fed is also expected to signal another 50 basis point tightening next year, according to economists polled by Bloomberg, and an anticipation that once they reach that peak, they will remain on hold through 2023. .
Financial markets agree on the short-term view, but see a rapid pullback in rates later next year, which doesn’t entirely align with the bank’s latest comments. Investors expect price pressures to ease faster than the Fed expects, which fears inflation will prove persistent.
This week’s meeting in Washington will therefore be another opportunity for Powell to insist that officials expect to keep rates high to beat inflation, as he did in a Nov. 30 speech when he stressed that the policy would remain restrictive “for a while”, recalls Bloomberg. Over the past five interest rate cycles, the average hold at a peak rate was 11 months, and these are periods when inflation was more stable, the agency adds. The Fed also sent the message that the key rate should remain at its maximum level for some time…
Thursday, operators will also be very attentive to monetary announcements from the ECB and the Bank of England.
In China, the relaxations are confirmed within the framework of the anti-covid policy of the local authorities… The main Chinese medical adviser has minimized the risks linked to Omicron, with a mortality rate comparable to that of the flu. China will also remove the tracking app as it continues to ease covid-related restrictions, NBC News adds. Beijing is lifting restrictions on transport workers that have slowed freight delivery, the Financial Times said. China is finally reducing the number of sites deemed to be at high risk from a wider covid epidemic, Reuters noted.
Amgen (-0.6%) confirmed an agreement to acquire the firm Horizon Therapeutics (+15%) for 26.4 billion dollars, which constitutes the most important ‘deal’ in its history. Horizon develops drugs to treat rare and serious inflammatory autoimmune diseases that are currently sold primarily in the United States. Its most prominent drug, Tepezza, is used to treat thyroid eye disease, a condition characterized by progressive inflammation and tissue damage around the eyes. The company is listed on Nasdaq, but based in Ireland and has operations in Dublin, Deerfield, Illinois, and a new location in Rockville, Maryland. Amgen, Sanofi and Johnson & Johnson were in the running to acquire the group, but it was ultimately Amgen that won.
Amgen agreed to pay $116.5 in cash per Horizon share, representing a premium of approximately 20% on Friday’s closing price and a bonus of 48% compared to the prices preceding the first rumors. Note that this is also the largest merger operation in the health sector this year.
The deal is expected to generate strong cash flow for Amgen, with the companies accumulating approximately $10 billion in combined cash flow in the 12 months through the third quarter of 2022. It is expected to increase adjusted earnings per share from 2024 and lead to pretax cost savings of at least $500 million by the third year after closing.
Coupa Software (+26.6%), a Californian platform for managing business expenses, announced a definitive agreement for its acquisition by the firm Thoma Bravo for $81 per share in cash, i.e. a transaction valued at $8 billion. Thoma Bravo wins here ahead of Vista Equity Partners, which also coveted the software group. This is an all cash transaction. Coupa will then be delisted. The transaction includes a significant minority investment from a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA). Under the terms of the agreement, Coupa shareholders will receive $81 per share in cash, representing a 77% premium to Coupa’s closing stock price on November 22, the last trading day before media reports regarding a possible transaction.
Rivian (-6.1%), the American manufacturer of electric vehicles, supported by Amazon, intends to suspend its joint venture with Mercedes-Benz Vans, only three months after concluding this partnership with the German car manufacturer in the production of electric vans in Europe .
Apple (+ 1.6%) rises after having corrected heavily in recent days against the backdrop of demonstrations in China at the production site of the iPhone subcontractor Foxconn. Evercore ISI understands that delivery times for Pro models of iPhones have decreased to 22-26 days in all geographies tracked except Japan, while demand remains strong.
Boeing (+3.7%). Air India, owned by India’s Tata Group, is reportedly set to place a historic order for at least 500 aircraft from both Airbus and Boeing worth tens of billions of dollars, sources in the country told Reuters on Sunday. sector.
Microsoft (+2.9%) will acquire 4% of the London Stock Exchange. The American giant will buy back the shares held by a consortium made up of Blackstone and Thomson Reuters, the company announced. Scott Guthrie, Microsoft’s executive vice president for cloud and artificial intelligence, will be named non-executive director of LSEG in due course. The stake is part of a broader 10-year partnership to help the owner of the London Stock Exchange develop data analytics and cloud infrastructure using Microsoft products, the Redmond firm said.
The deal is expected to cost LSEG between £250m and £300m between 2023 and 2025, including around £100m in capital expenditure. The deal is expected to “significantly” increase LSEG’s revenue growth over time as new products come into service. Microsoft is expected to secure approximately $2.8 billion in spending from LSEG over the life of the partnership, with possible additional revenue depending on the “success of the strategic partnership” and demand for the data platform and professional services of LSEG.
Gap (+0,5%) et Tapestry (+0.8%) benefit from buying advice from Goldman Sachs on Wall Street, GS also revising from ‘sell’ to ‘neutral’ its recommendation on the file Best Buy (+0.8%). Note that investment banking, on the other hand, deteriorated Levi Strauss (+3.6%) from ‘buy’ to ‘neutral’. JP Morgan, for its part, raised from ‘neutral’ to ‘overweight’ its advice on Box (+7,4%).