Better-than-expected U.S. jobs data boosted exchange traded funds (ETFs) and the dollar on Friday as hopes that the U.S. economy is on the mend offset the uncertainty over the conflict in Libya.
- Nasdaq OMX and IntercontinentalExchange unveiled a rival bid to buy NYSE Euronext for about $11.3 billion in cash and stock, topping the offer made by German competitor Deutsche Boerse. The new offer is valued at $42.50 per share, Nasdaq and IntercontinentalExchange said. The offer represents a 19% premium to NYSE’s closing price on Thursday and is 27% above the company’s valuation before Deutsche Boerse’s $10.2 billion bid in February. “It’s quite a bold move from Nasdaq and ICE. Certainly I think the premium they’re paying is quite high,” said Karl Morris, an analyst at Keefe Bruyette & Woods in London. “It makes you wonder what Deutsche Boerse is going to do about this and I struggle to see how they can lift their bid to match.” The Direxion Daily Financial Bull 3x Shares ETF (NYSEArca: FAS) gained almost 3% already today.
- Oil prices rose on Friday, with Brent crude nearing $118, as investors anticipated U.S. payrolls data later in the session would confirm the improving economic outlook of the world’s largest oil importer. Fighting in Libya, where Muammar Gaddafi’s forces appear to have regained the upper hand, supported crude prices as the prospect of a drawn-out conflict reduced expectations of lost Libyan oil returning to the market in the near future. Further supply disruption came from Gabon, which produces between 220,000 and 240,000 barrels a day, where striking workers are shutting half the central African nation’s crude oil output on Friday and plan to halt the remaining output within 48 hours. “I think we are going to be range trading ahead of the payroll data but if it proves strong we could see oil advance further,” said Christin Tuxen, an analyst at Danske Bank, adding she expected Brent to trade between $110 and $125 a barrel in the second quarter of 2011. The United States Oil ETF (NYSEArca: USO) was up slightly early Friday.
- Treasury prices extended a decline, pushing up on yields, after a government report Friday showed the U.S. economy added 216,000 jobs in March, more than economists expected. Yields on 10-year notes, which move inversely to prices, rose 3 basis points to 3.50%. Yields on 2-year notes gained 4 basis points to 0.87% and 30-year bond yields added 3 basis points to 4.54%. Bonds were under pressure before the data after Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, told The Wall Street Journal that interest-rate hikes by half a percentage point later this year are “certainly possible.” On Thursday, Treasuries ended the seventh straight month of prices falling and yields increasing, including the longest string of days with yields rising since 1999. The iShares Barclay 7-10 Year Treasury ETF (NYSEArca: IEF) is flat in early trading.
- China’s manufacturing sector regained momentum in March, easing fears of a sharp slowdown, on strengthening demand for autos and machinery, according to surveys released Friday. The state-affiliated China Federation of Logistics and Purchasing reported its purchasing managers’ index, or PMI, rose to 53.4 last month, from 52.2 in February and 52.9 in January. The rebound in demand was partly due to the dampening effect of a week-long holiday for the Lunar New Year in February, it said. The rise ended a three-month decline, though the reading has remained above 50, the benchmark for expansion, for over two years. A second, competing survey, the HSBC China Manufacturing Purchasing Managers Index, edged up to 51.8 in March from a seven-month low of 51.7 in February. Economist Hongbin Qu of HSBC said the figure showed the pace of manufacturing stabilizing. “This implies economic growth is only moderating rather than slowing too much. More importantly, price hikes also started to slow in March,” Qu said. The Direxion Daily China Bull 3x Shares ETF (NYSEArca: CZM) jumped about 4% early Friday.
Gregory A. Clay contributed to this article
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