BP Buys Renewable Natural-Gas Company in $4.1 Billion Deal
Topic of the day
BP PLC said it had agreed to buy U.S. biogas producer Archaea Energy Inc. for $3.3 billion plus debt in a bet on growing demand from customers for renewable fuel. The British oil major said Monday that the acquisition of Houston-based Archaea - its biggest deal since its 2018 acquisition of U.S. shale assets - would expand the company's clean-energy portfolio. BP, like other big oil companies, is shifting more resources into lower-carbon energy, even as it continues with its core business of producing oil and gas. BP agreed to pay $26 a share for Archaea, a 38% premium to the U.S. company's 30-day weighted share price. BP also will take on $800 million of Archaea's debt, taking the total value of the deal to $4.1 billion. BP executives said Archaea and BP would be able to tap into rising demand for renewable natural gas. They also said investors would benefit from the oil major's global trading operation and deep pockets, as well as U.S. government tax credits for renewable-energy investment.
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Shrugging off some somewhat sluggish movements early on in the session, the Switzerland stock market kept surging higher and higher on Monday as buying interest gathered momentum, and eventually ended the day's session on a buoyant note. A positive trend in other markets across Europe, and on Wall Street, aided sentiment. The benchmark SMI ended with a gain of 169.37 points or 1.64% at 10,498.71, around 40 points off the session's high of 10,538.32. All the components of the SMI index ended in positive territory, gaining between 1% and 4.7%. Sonova, up 4.7%, was the top gainer in the SMI index. Partners Group, Richemont, Credit Suisse and ABB gained 2.4 to 2.9%. Givaudan, Geberit, Lonza Group, Swiss Life Holding, Nestle, Sika, Holci, Zurich Insurance Group, Alcon and Logitech gained 1.5 to 2%. In the Mid Price Index, Belimo Holding rallied 7.4%. Zur Rose climbed nearly 6%. Dufry, VAT Group and Adecco gained 3.4 to 3.7%. Straumann Holding, SIG Combibloc, Temenos Group, Julius Baer, Tecan Group, Swatch Group, Flughafen Zurich and PSP Swiss Property advanced 2.5 to 3%.
European stocks closed notably higher on Monday, reacting to new British finance minister Jereme Hunt's decision to scrap most of the policies announced in Prime Minister Liz Truss's budget on September 23. UK finance minister Jeremy Hunt said income tax cuts the government had planned would be shelved indefinitely, and he reversed plans to slash dividend tax rates and scrap alcohol duties. The measures announced by Hunt reverse more of Prime Minister Liz Truss's growth program, which prompted a selloff in UK assets after it was unveiled by her then-chancellor Kwasi Kwarteng. Hunt took over as finance minister after Truss fired Kwarteng on Friday. Hectic bargain hunting at several counters following recent sharp losses contributed as well to the jump in stock prices. Worries about rising interest rates, slowing growth and geopolitical tensions continued to linger, but that did not deter investors from picking up stocks. The pan European Stoxx 600 climbed 1.83%. The U.K.'s FTSE 100 gained 0.9%, Germany's DAX moved up 1.7% and France's CAC 40 surged 1.83%. Switzerland's SMI gained 1.64%. Among other markets in Europe, Austria, Belgium, Finland, Greece, Ireland, Netherlands, Norway, Poland, Portugal, Russia, Spain, Sweden and Turkiye closed sharply higher.
U.S. stocks surged Monday, another day of outsize moves on Wall Street, as investors tried to make sense of an unsettled economic outlook and geared up for another batch of corporate earnings. The S&P 500 rose 94.88 points, or 2.6%, to 3677.95. The index slid 2.4% Friday after a 2.6% gain Thursday. The Dow Jones Industrial Average added 550.99 points, or 1.9%, to 30185.82, while the Nasdaq Composite jumped 354.41 points, or 3.4%, to 10675.8. The indexes pulled out of their latest selloff in part on the strength of earnings reports, including those by some of the nation's biggest banks. Investors were bracing for evidence that many companies were already mired in a slump. So far, they have been pleasantly surprised, said Quincy Krosby, chief global strategist at LPL Financial. The next big test for the market is earnings season. Results gather pace this week with reports due in the coming days from Goldman Sachs Group, Johnson & Johnson, Netflix and Tesla, among other major companies. Results and guidance from executives about the next few quarters will pose a test for a market that has been buffeted by rising rates this year. Shares of Bank of America rose $1.92, or 6.1%, to $33.62 after the lender said per-share earnings topped analysts' forecasts in the third quarter. Some of the biggest U.S. banks reporting last week said they were nervous of a recession, but their third-quarter earnings showed few signs of one yet. Bank of New York Mellon, the world's biggest custody bank, jumped $1.95, or 5.1%, to $40.36 after also reporting results that beat expectations.
With Wall Street's upward momentum behind them, the Asian stock markets are also moving upwards in late trading on Tuesday. Technology stocks in particular are getting a tailwind from the rally of their US counterparts. But traders also say that the turnaround in British fiscal policy has restored confidence, which is also having a positive effect on the markets in Asia. In China, the announced but now postponed publication of GDP data is causing some unease and cautious price rises.
In the U.S. bond market, the yield on the 10-year Treasury note edged up to 4.012%, from 4.005% Friday. Yields have risen for 11 consecutive weeks, driven by the Fed's campaign of interest-rate increases.
JPM lowers Adecco target to CHF 28 (30) – Underweight
CS lowers Lanxess target to EUR 42 (46) – Outperform
CS lowers Evonik target to EUR 16.50 (19) – Underperform
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