Morning Brief: Dow Jones and Global Stocks Jump on Major Corporate Deals

Summary:

The Dow Jones and other indices rose in early trading as investors reacted to corporate deals from around the world. Coronavirus vaccine also contributed

Global stocks are in the green as investors react to several positive corporate events that happened during the weekend. In Asia-Pacific, the Nikkei 225, Hang Seng, and ASX 200 are up by 0.55%, 0.55%, and 0.60%, respectively. In Europe, futures tied to the DAX index, CAC 40, and Stoxx 50 are up by 1%, 0.55%, and 0.50%, respectively. Similarly, in the United States, Dow Jones, S&P 500, and Nasdaq 100 futures are up by more than 1%.

Global stocks are rising because of four key reasons. First, there were several deals announced during the weekend. On Saturday, it was reported that Softbank was selling Arm to Nvidia, the American chip maker for more than $40 billion. That will mark a $4 billion profit for the company, which acquired the firm for more than $36 billion. Subsequently, Softbank will become the biggest investor in Nvidia.

Second, according to the Financial Times, Softbank executives have started talking about taking the company private. Third, in the United States, Gilead Sciences announced that it would acquire Immunomedics in a transaction worth more than $21 billion. That will represent about 100% premium over the company’s stock closing price on Friday. The deal will make the company a leading player in cancer treatment.

Third, earlier today, billionaire Ronald Perelman reached a deal to sell Scientific Games to Australia’s Caledonia in a deal worth more than $2 billion.

Global stocks are also rising because of the new developments on coronavirus vaccine. Over the weekend, AstraZeneca announced that it would resume trials for its vaccine. This happened a few days after the company halted the clinical trials after a member got sick. Elsewhere, in the United States, Pfizer said that it is planning to release its vaccine by the end of the year.

Meanwhile, stocks are rising because of the upcoming Federal Reserve meeting. The bank will meet tomorrow and deliver its decision on Wednesday. Analysts don’t expect major changes from the central bank. They see it leaving its interest rate and QE unchanged. It will also not hint at negative rates and yield curve control.

Dow Jones technical outlook

The daily chart shows that the Dow Jones futures are trading at $27,950. This price is along the 50-day exponential moving averages and slightly above the 100-day EMA. The price is also above the Friday’s low of $27,440. It is also above the ascending purple trendline that connects the lowest points on June 15, June 29, July 30 and 31, and 8^th, 10^th, and 11^th September.

Therefore, it seems like bears have failed to push the Dow Jones below this trendline, which means that it is likely to continue rising. If it does, bulls will attempt to rise above $28,000 as they target last month’s high of $29,000. On the flip side, a move below the support at $27,400 will invalidate this trend.

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