US open: Major M&A deals push equities higher

US equities gained ground early on Wednesday as Wall Street looked to have put last week’s wobble behind it, while some investors focused on big M&A deals.

Shortly before 1500 GMT, the Dow Jones Industrial Average was up 24 points to 17,781.99, while the S&P 500 and the Nasdaq were three and five points higher respectively.

The Dow Jones and the S&P 500 gained 0.16% and 0.15% respectively on Tuesday, clinching their first daily gains after fears over a potential December interest rate hike had sparked a four-day decline.

“Markets have finally priced in Friday’s nonfarm payrolls surprise and the potential for a more hawkish Fed,” said Colin Cieszynski, chief market strategist at CMC Markets.

M&A in focus

In company news, drink giants Anheuser-Busch InBev and SABMiller gained 1% and 2.05%, after the latter accepted a $106bn takeover offer, as it agreed to sell its 58% stake in the MillerCoors LLC joint venture to its partner Molson Coors Brewing, whose shares gained 0.26%.

Supermarket chain Kroger gained 0.19% after confirming it has agreed to takeover grocery chain Roundy in a deal worth $800m, sending Roundy shares up 64.2%.

Alibaba declined 1.79% even though the Chinese e-commerce giant posted record sales for China Singles’ Day.

Chip maker Skyworks Solutions edged 0.46% higher after announcing a $400m stock buyback plan late on Tuesday, while retail giant Macy's tumbled 11.7% after lowering its full year outlook as sales fell short of estimates.

Elsewhere, most Asian equity markets advanced on Wednesday, as investors shrugged off another batch of mixed data from China.

Official figures showed industrial production in the world’s second largest economy grew 5.6% year-on-year in October, compared with a 5.7% gain in the previous month and with analysts’ expectations for a 5.8% reading.

European stocks gained ground, while oil prices edged lower, as West Texas Intermediate lost 0.66% to $43.92 a barrel, while Brent slid 0.06% to $47.41 a barrel.

The dollar was broadly flat against the yen and the euro but fell 0.31% against the pound, while gold spot slid 0.24% to $1,087.07.

The economic calendar is extremely quiet on Wednesday, while bond markets are closed for the Veteran’s Day holiday.

Meanwhile, the Mortgage Bankers Association (MBA) said its seasonally adjusted index of application activity, which covers home purchase demand and refinancing demand, declined 1.3% in the week ended 6 November.

The seasonally adjusted sub-index of refinancing applications slid 2%, while the index of loan requests for home purchases, a key indicator of home sales, rose 0.1% and is 18% higher year-on-year.