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Markets Digest Prior Gains, German DAX Eclipses 10,000


Today's financial recap and tomorrow's financial outlook.

Although some European countries were observing Whit Monday today, all equity and bond markets were open. The German DAX (INDEXDB:DAX) closed over 10,000 for the first time in history - the only significance of which is that it is a round number with five digits. Italy's equity and bond markets, viewed as the de facto risk asset to buy when the ECB is easing, continued to lead. The FTSEMIB (INDEXBIT:FTSEMIB) closed up 0.82% and was the third best market in Europe behind Sweden and Spain. The Italian 5-year yield fell by six basis points to 1.298%. Since the historic ECB meeting last Thursday, the 5-year has fallen by 41.5bps.

US markets worked off their gains from the prior two sessions on Monday. Notably, financial stocks, led by regional banks, were a top performer in the S&P 500 (INDEXSP:.INX), while industrial stocks led the day. (Recently, life insurance stocks had outperformed as the 10-year Treasury yield increased by more than 20bps.) Utilities stocks were the worst performer -- this after making a double top last Friday.

Three multi-billion dollar acquisition deals highlighted the early, positive trading in stateside equities. Tyson Foods (NYSE:TSN) announced that it had won the bidding for Hillshire Brands (NYSE:HSH) at a price of $63 per share. The total purchase price, for call cash, amounted to $8.55 billion including net debt. Analog Devices (NASDAQ:ADI) confirmed the purchase of Hittite Microwave (NASDAQ:HITT) for $78 per share or $2.45 billion in all cash. Presumably, all of the cash deals would be financing through new debt offerings. Lastly, Merck (NYSE:MRK) confirmed its purchase of Idenix Pharmaceuticals (NASDAQ:IDIX) for $3.85 billion in all cash, which was a 239% premium over last Friday's closing price. a bidding war for the company drove up its price.

Tomorrow's Financial Outlook

The only economic data report to be released is April wholesaler inventories. Inventories are expected to increase by 0.6% month-on-month after rising 1.1% in March. The US Treasury will auction $28 billion in 3-year notes, the first of three auctions this week.

Similarly, although there is a considerable amount of global economic data scheduled to be reported tomorrow, most of it is from April or the first quarter, which are both well behind us. Notable among those reports are UK industrial and manufacturing production, Australian home loans, and the NIESR estimate of UK GDP in May.

The only two companies scheduled to report earnings tomorrow are Radioshack (NYSE:RSH) and Ulta Salon (NASDAQ:ULTA).

Twitter: @Minyanville

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No positions in stocks mentioned.

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