Stocks
On Monday, the shares of Aruba Networks (ARUN, -0.20%)
declined by 1.3 percent in premarket trade. This came after the company
announced a $3 billion agreement to be acquired by Hewlett-Packard (HPQ,
-0.09%) which is now expected to close in the second half of H-P's fiscal 2015.
This deal is expected to boost H-P’s 4.5% share in the WLAN (wireless local
network) arena which has enabled employees to work remotely. Aruba currently
owns 10 to 13% of the WLAN market share and according to market research firm Dell'Oro
Group, the WLAN marked is estimated to grow to about $14 billion in 2019, up
40%. Based on the agreement, Hewlett-Packard will pay Aruba $24.67 in cash for
each outstanding share. This is below the closing price on Friday of $24.81 a
share. Last week, after the deal became public, the shares of H-P advanced 0.7%
while the shares of Aruba surged by 35%. This deal will mark the biggest deal
for the world’s No.2 PC maker after the company unsuccessfully acquired
Britain's Autonomy Plc in 2011 and EDS in 2008. At the end of January this
year, H-P's cash pile stood at $12.9 billion and the company’s shares are
currently trading at $34.76 a share.
Indices
Monday saw the Nasdaq Composite Index (COMP) cross the 5,000
level. The last time the tech-heavy index traded above this level was only in
2000 while the Dow Jones also traded in record territory. These advances in the
main indices came in response to disappointing economic reports out of the U.S.
with investors choosing to brush off the data and to focus on the growing
economy. According to data released, the consumer spending declined more than
expected in January while the saving rate increased. Also, the manufacturing
gauge from the Institute for Supply Management slowed in February but met
expectations. Also on the downside was construction spending which declined in
January. The S&P 500 index (SPX) closed higher, close to its record level
with the consumer discretionary sector leading the gains. Meanwhile, the Dow
Jones Industrial Average (DJIA) advanced 140 points with Visa Inc. and
McDonald’s Corp as the top gainers. Also on the upside was the Nasdaq which
advanced 0.7 percent to cross the 5,000 level.
Currencies
Despite disappointing data out of the U.S., the U.S. dollar
(USD) traded higher and extended gains. This came even after data showed that
manufacturing activity in the U.S. expanded at the slowest pace in February in
thirteen months while an upbeat growth report released on Friday continued to
support. In their report, the Institute for Supply Management stated that their
purchasing manager’s index (PMI) fell to 52.9 in February which was below
expectations for a decline to 53.0. This was down from a reading of 53.5 in
January. Also, in their report, the U.S. Commerce Department reported that
consumer spending declined 0.2 percent in February with analysts forecasting a
decline of only 0.1 percent. In Forex trading, the EUR/USD traded steady for
the day at 1.1240. Against the British pound, the greenback traded higher with
GBP/USD at 1.5363, down 0.49% while the Japanese yen also traded lower with
USD/JPY at 120.08, up 0.42 percent. Also, the U.S. dollar index advanced to
95.43, up 0.14 percent.
Commodities
On Tuesday, in Asian trading, crude oil prices advanced
marginally as investors await industry data on supplies expected out of the
U.S. today. The American Petroleum Institute will release its weekly estimate
of crude, gasoline and distillate stockpiles while the U.S. Department of
Energy will release their data on Wednesday. Crude oil for April delivery
traded at $49.83 a barrel, up 0.18 percent on the NYMEX. Elsewhere, Brent oil
for delivery in April delivery declined 1.81 percent, or $1.14, to trade at
$61.45 a barrel on the ICE Futures Exchange in London. This decline came in
response to concerns regarding supply disruptions out of Libya.
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