China's Brilliant Market Endrun
Start of the quarter usually brings in slightly stronger volume; on July 1, the NYSE Consolidated Tape did 6.7 billion shares, one of the heaviest days of the year.
The key stat this morning is China's September PMI, which came in slightly better than expected.
In the U.S., personal income and spending both came in a bit better than expected.
1) China buys into Brazil. Last week's record secondary from Brazilian oil giant Petrobras was expected to be followed by a large IPO of Spanish oil giant Repsol's Brazilian operations. That was before China stepped in. Last night Chinese oil giant Sinopec invested $7.1 billion to buy 40 percent of Repsol Brazil, putting an end to the IPO. It was another brilliant end-run by the Chinese.
2) The Chinese IPO parade continues. Following in the footsteps of two successful IPOs recently (SouFun (SFUN) and Country Style Cooking (CCSC)), two firms priced their IPO this morning:
a) Wind turbine maker firm China Ming Yang Wind Power (MY) raised $350 million in its offering. The company priced 25 million shares at $14 — at the low end of the expected $14-$16 price range.
b) Internet content provide China Cache fared a little better, pricing 6.06 million shares at $13.90 per share — above the prior price range of $10-$12.
Still, don't kid yourself — it's been rough for IPOs. Those who got excited by the historic secondary of Petrobras (PBR) last week were hoping that it was a sign of renewed interest in equity offerings. Those hopes were dashed when Liberty Mutual pulled its big IPO this Wednesday, citing market conditions.
3) Hewlett-Packard falls 3 percent despite naming a new CEO to replaced Mark Hurd who abruptly resigned in August. Appointed to the CEO post is Leo Apotheker, who spent a number of years at German business software firm SAP.
4) MetLife said that its 2011 earnings could be cut by $0.20 per share if yields on the 10-year Treasury note remain at 2.5 percent through next year. Government yields have been hovering near historic lows of late, with the yields on the 10-year at 2.52 percent now.
5) Accenture rises 4 percent after the consulting firm beat Q4 estimates ($0.66 vs. $0.63 consensus) as revenues came in at the high end of its previous forecast. The momentum looks to continue too, as new bookings (a predictor of future sales) came in above estimates at $6.5 billion. Revenue guidance for the current new year was reaffirmed, but earnings guidance was raised to $3.00-$3.08, ahead of analyst estimates of $2.92 billion.
The firm also boosted its semi-annual dividend by 20 percent to $0.45 per share.
6) United Continental Holdings: United and Continental announced the closing of their merger. The new airline — United Continental Holdings — will use the United name and the Continental logo on its planes, and will be traded at the NYSE under ticker "UAL" beginning today.
7) Shares of children's apparel retailer Gymboree soar 21 percent on a Wall Street Journal report that the firm is exploring a sale to private equity firms.
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