A bounce back in takeover activity, including Blackstone's bold $26 billion bid for Hilton, is giving strength to stock futures ahead of the opening on the second leg of this holiday-shortened week.
European stocks are mostly lower. The Bank of England raised interest rates by a quarter point to 5.75% and the European Central Bank, as expected, kept its benchmark interest rate unchanged at 4%.
Asian markets finished mostly higher overnight. But China stocks had their biggest decline in a month. Shanghai shares lost about 5.5% though the index is still up 73% for the year. Stocks fell on concerns that new share offerings would pressure prices as more supply comes into the market.
The increase in merger activity is injecting some healthy confidence into the market this morning.
Shares of hotel companies move up on takeover speculation after the Blackstone deal for Hilton . Apollo meanwhile is bidding $6.34 billion for Huntsman Chemical .
Coca-Cola confirms it's interested in acquiring Snapple from Cadbury Schweppes at the right price. Coke CEO E. Neville Isdell told Reuters that the company was evaluating a bid for Snapple, and the Wall Street Journal says Coke has approached several private equity groups interested in bidding for Cadbury.
Jones Apparel this morning said it received an unsolicited offer from Japan's Fast Retailing to acquire Barneys for $900 million, topping a bid from Dubai's Istithmar.
Despite the flurry of new deal activity, traders will be keeping a watchful eye on the credit markets. On Tuesday, another debt offering was shelved when underwriters called off a $1.15 billion sale of junk bonds to pay for the leveraged buyout of ServiceMaster, a lawn care and pest control company. Service Master received a direct bridge loan from underwriters, who will try to place debt later.
Private Equity Power
Kohlberg Kravis Roberts is planning to join rival Blackstone as a public company. KKR's move to issue shares once more raises the question of whether private equity's plan to cash out signals a market top. Yet Blackstone's big bid for Hilton should give the market some assurance that private equity will not be shy about putting its capital to work.
Oil is higher this morning, edging toward $72 a barrel in New York trading .