KKR's Independence Energy to Combine With Contango Oil & Gas
Topic of the day
Independence Energy LLC, an upstream oil-and-gas business built by private-equity firm KKR & Co. (+2,1%) and Contango Oil & Gas Co. (-9,6%) said they have agreed to combine in an all-stock transaction. Independence and Contango said the combined company would have an initial equity market capitalization of about $4.8 billion and an enterprise value of roughly $5.7 billion. The companies said that the deal would create a diversified and low-leverage U.S. independent oil-and-gas company focused on consolidation, adding that Independence shareholders would own about 76% of the combined company, while Contango shareholders would hold 24%. Based on Monday's closing price of $5.62, Fort Worth, Texas, independent oil-and-gas company Contango currently sports a market capitalization of about $1.08 billion. The companies said they expect to complete the transaction late in the third quarter or early in the fourth.
The Swiss stock market ended trading on Tuesday with a marginal gain. In the course of the session, the SMI had once again reached a record high. The market's focus is now increasingly on new inflation figures from the U.S. and on the European Central Bank's (ECB) monetary policy decision on Thursday. The SMI gained 0.2 percent to 11,657 points. Among the 20 SMI stocks, there were 11 price gainers and 8 losers, Richemont closed unchanged. 38.34 (previously: 26.69) million shares were traded. Daily winners were Lonza with a plus of 2.3 percent. However, higher premiums could not be maintained. The shares thus continued their upward movement from the previous day and marked a new all-time high. In the market, the company is seen as a beneficiary of the U.S. approval of the Biogen drug against Alzheimer's disease. According to Deutsche Bank, the presumably high demand for the drug should lead to production outsourcing. Shares of Roche (+0.7%), which is also active in Alzheimer's research, also benefited from the approval. Novartis (-0.5%), meanwhile, lagged significantly. Shares of index heavyweight Nestle (+0.5%) were also in demand. Traders spoke of a rotation into defensive value stocks. The share also rose in the course to an all-time high. Financial stocks, meanwhile, failed to score. UBS fell 0.2 percent, CS Group were with a minus of 1.7 percent loser of the day.
German stocks got off to a lackluster start on Tuesday, lagging behind other major European equity indexes, after data showed that industrial production fell unexpectedly in April. The data, measuring total industrial output from manufacturing, energy, and construction, decreased 1% in April from March, the country's Federal Statistics Office said on Tuesday. The figures missed expectations for an increase of 0.4%. The Stoxx Europe 600 index rose 0.1% to 454 points. In Paris, the CAC 40 and SBF 120 also gained 0.1%, while the DAX 30 in Frankfurt lost 0.2%. In London, the FTSE 100 rose 0.3%. Shares in European airplane manufacturer Airbus ticked up near 0.5%, after the group said it made 50 deliveries in May, up 11% month-over-month. Analysts at Swiss bank UBS said it was a "modest pickup.“ British American Tobacco stock lifted 1.5%, after the tobacco group upgraded its full-year forecast for revenue growth at constant currencies to above 5%, from a previously guided 3% to 5% range. Shares in Aviva, a FTSE 100-constituent, rose 3.5%, as Cevian Capital said the group should return GBP5 billion to shareholders. The Swedish activist investor announced on Tuesday that it had built a near 5% stake in the insurance giant. European-listed major oil companies fell in tandem with a drop in oil prices, with shares in BP, Royal Dutch Shell, Eni and Total all down.
The S&P 500 ended slightly higher Tuesday, pushing the index to its third-highest close on record, after a trading day marked by narrow swings between gains and losses. The broad benchmark index climbed 0.74 points, or less than 0.1%, to close at 4227.26—putting it 0.1% away from a fresh record. The Nasdaq Composite also rallied, climbing 43.19 points, or 0.3%, to 13924.91. That marked the index’s third consecutive session of gains thanks to a Tuesday rebound in technology and growth stocks including Amazon.com, Apple and PayPal. The Dow Jones Industrial Average, in contrast, fell 30.42 points, or 0.1%, to 34599.82. The U.S. stock market has been moving largely sideways lately, as investors have weighed concerns about inflation and supply-chain problems against signs that the economy is returning to normal. In addition to a rebound in some technology and growth stocks Tuesday, shares of consumer discretionary stocks, as well as energy companies rallied. Exxon Mobil and Diamondback Energy rose 1.8% and 2.8%, respectively, buoyed, in part, by a continued rise in oil prices. Small-cap companies also advanced, with the Russell 2000 gaining 1.1% for the day. On a year-to-date basis, the index of small-cap stocks has rallied 19%, outpacing all three major U.S. indexes. Shares of meme stocks have also been especially volatile recently as individual investors have continued to pile back into stocks. Shares of Clover Health Investments soared $10.23, or 86%, to close at $22.15, a new all-time high after the healthcare company emerged as the latest darling among individual investors on Reddit forums. Tuesday’s rally built on the company’s 32% gain Monday. Other so-called meme stocks like GameStop and Bed Bath & Beyond also climbed. GameStop, which reports first-quarter earnings Wednesday, jumped $19.99, or 7.1%, to close at $300. Bed Bath & Beyond added $2.85, or 8.4%, to finish at $36.83. AMC Entertainment Holdings, which soared recently, gained 5 cents, or 0.1%, to close at $55.05. Bitcoin prices also continued to slide. The cryptocurrency fell to $33,637.57, traded at about $33,187 at 4:30 p.m. ET Tuesday, according to CoinDesk, a 2.4% drop down about 3.7% from its 5 p.m. ET level Monday. One factor behind the fall was a concern about stricter oversight and involvement by regulators in cryptocurrencies. The Justice Department on Monday said it had recovered about 64 bitcoin from hackers who targeted Colonial Pipeline, a major fuel pipeline, with a ransomware attack last month.
Also on Wednesday, rather little happens regarding the indices of the stock markets in East Asia. The largest swings are found in Shanghai (+0.4%) and Seoul (-0.3%). In Tokyo, the Nikkei index gives up 0.3 percent to 28,865 points.
Yields for the 10 and 30-year U.S. Treasurys hit their lowest in at least three months Tuesday, ahead of policy meetings of the European Central Bank on Thursday and the Federal Reserve next week. A report from CNBC said the U.S. central bank may begin to discuss tapering at its coming gathering, setting the table for an eventual rollback of its $120 billion-a-month asset-purchase program. The 10-year Treasury note was yielding 1.527%, from 1.570% Monday, marking its lowest yield since March 11.
GS lowers Lufthansa to Sell (Neutral)/Target EUR 8.10 - Trader
Jefferies lowers Nordex target to EUR 30 (31) - Buy
GS lowers Gea to Sell (Neutral)/Target EUR 28 - Trader
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