Spreadex Market Update
US GDP misses estimates whilst Pfizer and Allergan get the ol’ M&A alarm bells ringing
Analysts were always expecting a steep drop off from the stellar 3.9% growth the US posted in Q2; however, today’s third quarter reveal showed a worse than expected fall (if only just), coming in at 1.5% against the 1.6% forecast. Now, that isn’t a great sign, especially with Janet Yellen and co. sparking talk of a December lift-off last night. However, less worryingly the main growth-cutter was a slide in businesses’ inventory-building, that factor alone wiping 1.4% off of the country’s Q3 figure. It also still leaves the country’s average growth at 2% across the year so far, a solid figure that is unlikely to cause a drastic change in tone from the central bank.
Regardless the Dow Jones still fell by around 50 to 60 points at the open, be it because the third quarter GDP really was that bad OR because it wasn’t bad enough to dissuade the Fed from the rate-hike path it appears to be back on, take your pick.
Beyond the US GDP, the biggest news of the afternoon came from the land of M&A, a realm that has been frequented an alarming number of times already in 2015. The latest reports came from the pharmaceutical sector, as Pfizer confirmed that it is in merger talks with Allergan (formerly known as Actavis as late as February this year). Wary Pfizer investors found little to get excited over just yet, sending the stock down by just shy of 1%; Allergan, on the other hand, rocketed on the news, jumping by nearly 9% to a 10 week high of £312.
And what of the European indices? Well, the FTSE, mired in the latest commodity-sector wide plunge (something that could continue tomorrow as BG Group reveals what are expected to be some pretty bad Q3 results) maintained its 1% drop, whilst the DAX widened its losses to around 75 points as Deutsche Bank took yet another turn for the worse.
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