2 Feb 2012: Glencore and Xstrata close to a merger

INDICES POINTS CHANGE
FTSE 100 5776 Down 26bp
S&P 500 1324 Up 89bp
NIFTY 50 India 5269 Up 64bp

Major Stories

  • Glencore and Xstrata close to a merger
    • Glencore and Xstrata are in advanced stages of discussing an $80bn merger; this would reshape the mining industry
    • This would be the first major merger of a commodities trading house with one of the largest miners of thermal coal and copper
    • It has been emphasised though, that nothing is certain at this point, and that negotiations are still on
    • Glencore head has been pushing for this merger for 5 years now, but his counterpart at Xstrata had said that it was difficult to value a trading house like Glencore
    • Last year’s $10bn flotation of Glencore has put some sort of a value on the company’s worth, which might convince Xstrata to go ahead with the merger
  • Stocks at six-month highs
    • Risk asset benchmarks look to consolidate their recent highs with the optimism from manufacturing worldwide reverberating
    • FTSE Eurofirst 300 has opened with a 0.2% advance to a six-month high; S&P 500 is expected to add 0.3% at open; FTSE All World is advancing 0.3% to its highest levels since August
    • Gold is up 0.3% to $1748/ounce
    • US has added 170,000 jobs in the last month in the private sector
    • There is news about Facebook picking Morgan Stanley for its IPO; Morgan Stanley climbed 5%
  • DB profits tumble with curbed trading
    • Deutsche Bank’s profits have tumbled with the crisis curbing trading
    • They have reported a 76% drop in Q4 profits; net income fell to Euro 147mn compared to Euro 601mn the previous year
    • DB shares fell 2% in Frankfurt trading
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