Exchange Traded Funds (ETFs) show strong opening gains Monday, as wireless carrier’s AT&T Inc.’s $39 billion deal for T-Mobile USA was followed by news of other corporate acquisitions.
- AT&T Inc. said Sunday it will buy T-Mobile USA from Deutsche Telekom AG in a cash-and-stock deal valued at $39 billion that would make it the largest cell phone company in the U.S. The deal would reduce the number of wireless carriers with national coverage from four to three, and is sure to face close regulatory scrutiny. It also removes a potential partner for Sprint Nextel Corp., the struggling No. 3 carrier, which had been in talks to combine with T-Mobile USA, according to Wall Street Journal reports. For T-Mobile USA’s 33.7 million subscribers, the news doesn’t immediately change anything. Because of the long regulatory process, AT&T expects the acquisition to take a year to close. But when and if it closes, T-Mobile USA customers would get access to AT&T’s phone line-up, including the iPhone. The iShares S&P Global Telecommunications ETF (NYSEArca: IXP) gained approximately 2.25% in early trading.
- Oil prices rose by over $2 a barrel on Monday as a wave of U.N.-mandated air strikes on Libya and proliferating unrest in the Middle East fanned concerns about oil supply from the region. U.S. crude for April gained $1.81 at $102.88 a barrel. “With the nature of the external military involvement becoming clearer, there is a further escalation of the situation, and the damage to infrastructure might be larger, keeping Libya out of the oil market for longer,” said Amrita Sen, an analyst at Barclays Capital. The Direxion Daily Energy Bull 3x Shares ETF (NYSEArca: ERX) surged almost 6% early Monday.
- European stock markets rose on Monday, led by the telecommunications sector, which rallied on news that Deutsche Telekom AG will sell its T-Mobile USA unit to AT&T Inc. European investors followed closely the nuclear crisis in Japan. Smoke was seen coming from reactors No. 2 and No. 3 at the troubled Fukushima Daiichi facility on Monday evening. “Markets got relief because someone told them Japan wasn’t about to explode, though there’s been a new plume of smoke out of one of the reactors,” said Justin Urquhart Stewart, co-founder of Seven Investment Management. “Then after that, you had the telecom deal. But you’ve got a level of excitement that probably doesn’t justify the risks that are there.” The iShares S&P Europe 350 Index ETF (NYSEArca: IEV) rose approx. 2% in early trading.
- Home sales fell 9.6% in February and nearly 40% of the sales were either foreclosures or short sales. The weak sales and rise in foreclosures pushed prices down to their lowest level in nearly 9years reports the Associated Press. There is a glut of unsold homes on the market and it would take nearly 9 months to clear them off the market. Home prices and sales are not the same across the country. The iShares Dow Jones U.S. Real Estate Fund (NYSEArca: IYR) is up 0.82% in morning trading.
Gregory A. Clay contributed to this article
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