- EU holds meeting on potential Italy crisis. The EU is set to hold an emergency meeting of top officials today on concern Europe's sovereign debt crisis could spread to Italy after a sharp sell-off in Italian assets on Friday. The market pressure is due to Italy's high sovereign debt, sluggish economy, concerns about stress tests on banks, and political uncertainty about spending cuts. Five-year credit default swaps on Italian bonds rose to a record high this morning. As of 7:00 ET, the euro is -0.75% against the dollar.
- Debt talks at standstill. President Obama and Congressional leaders will meet again today over raising the $14.3T debt ceiling after little progress was made in an unexpectedly brief parley yesterday. The weekend also saw a new element of disagreement: Obama wants a deal to cut the deficit by $4T, while the GOP believes $2T is about as much as can be achieved.
- Peabody, Arcelor bid $5B for Macarthur. Peabody Energy (BTU) and ArcelorMittal (NYSE:MT) jointly offered (.pdf) $5B to buy Australia's Macarthur Coal (OTC:MACDY), the world's biggest producer of pulverized coal. The A$15.50/share bid, a 40% premium to Monday's close, comes a day after Australia unveiled a plan to tax carbon emissions, and more than a year after Peabody dropped its initial bid. Arcelor already owns a 16.2% stake in Macarthur. Premarket: MT -1.4% (7:00 ET).
- Nestle buys majority stake in China's Hsu Fu Chi. After years of on-and-off talks, Nestle (OTCPK:NSRGY) has finally struck a deal to buy 60% of Chinese confectioner Hsu Fu Chi for $1.7B. The acquisition would be one of the biggest by a foreign company in China and would help Nestle in its attempts to expand in emerging markets, but must first pass muster with Chinese regulators.
- Alcoa earnings expected to rise. Alcoa (NYSE:AA) kicks off the Q2 earnings season for blue-chips after the close today. Analysts expect EPS of $0.34, up from $0.13 in last year's quarter, and revenue of $6.3B vs. $5.19B last year. Increased aluminum prices and orders from across different sectors are expected to have offset higher raw material costs and the effects of the Japan earthquake. There is also hope Alcoa will increase its guidance following a recent $1B order from Airbus (OTCPK:EADSY). Premarket: AA -0.5% (7:00 ET).
- Monsanto, Sinochem look to deepen ties. Monsanto (NYSE:MON) and Sinochem have reportedly been in talks for months about significantly deepening their ties, including the possibility of a large JV, the sale of a minority stake or Sinochem playing a larger role marketing Monsanto products in China. The talks, though advanced, have been slowed by economic and political concerns about a potential deal.
- Sky falling in on News Corp. acquisition hopes. News Corp.'s (NASDAQ:NWS) hopes of buying BSkyB (BSYBY.PK) may be fading after the U.K. government said it would seek fresh regulatory advice about the acquisition following the phone-hacking scandal at the News of the World. The affair could also open News Corp., and in particular James Murdoch, to investigations in the U.S. and the U.K. Any probes could put his position as his father's successor into doubt, while a U.S. investigation could cost News Corp. over $100M and last 2-4 years. In London, BSkyB's shares -5.3% (7:00 ET).
- Lonza to buy Arch Chemicals for $1.4B. Lonza (OTCPK:LZAGF) announced this morning that it's buying Arch Chemicals (NYSE:ARJ) for $1.4B in a deal that creates the world's largest microbial-control business. The Swiss company's offer of $47.20/share represents a 37% premium to Arch's average closing price over the last 30 days. An 11% spike in Arch's shares on Friday on unusually high volume may raise some eyebrows among regulators. Premarket: ARJ +10.9% to $46.75 (7:00 ET).
- Hertz extends Dollar Thrifty offer. Hertz (NYSE:HTZ) extended its $2.08B offer to buy Dollar Thrifty (NYSE:DTG) until August 5 from July 8. The terms of the deal, under which Hertz is offering $57.60 in cash and 0.8546 of its own shares for each Dollar Thrifty share, remain unchanged.
- Successful results for Sanofi MS drug. Sanofi's (NYSE:SNY) Lemtrada treatment was successful in reducing the relapse rate in multiple sclerosis patients in Phase III trials. The company now expects to file for U.S. and EU approval of the drug early next year and has been granted fast-track designation by the FDA. Separately, Sanofi agreed to sell its Dermik skincare unit to Valeant Pharmaceuticals (NYSE:VRX) for $425M as it becomes the latest drug giant to shed non-core assets. Premarket: SNY -2.1% (7:00 ET).
- Small companies add to bleak unemployment outlook. Almost two-thirds of small-businesses, which employ a significant proportion of the employees in the private sector, don't expect to increase their workforce over the next year. With many firms worried about the uncertain economy, another 12% plan to cut jobs, while only 19% said they would increase payrolls. The survey follows Friday's dismal jobs report.
- In Asia, Japan -0.7% to 10070. Hong Kong -1.7% to 22347. China +0.2% to 2803. India -0.7% to 18721.
- In Europe, at midday, London -0.2%. Paris -1.5%. Frankfurt -0.9%.
- Futures at 7:00: Dow -0.7%. S&P -1%. Nasdaq -1%. Crude -1.1% to $95.10. Gold +0.2% to $1544.50.
Monday's Economic Calendar
The Market Currents team contributed to this post.
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