According to The Wall Street Journal, the $49 billion bid made by AT&T Inc. (T.N) for DirecTV (DTV.O) is not likely to be blocked by authorities in the U.S. According to those familiar with the matter, the regulators at both the FCC (Federal Communications Commission) and the Justice Department are currently working on a final decision in order to clear the deal yet certain conditions may be attached in order for the deal to go through. AT&T has not yet met with the necessary officials in order to review these conditions yet negotiations are expected to proceed within the next few days. According to the Journal, one of the conditions which AT&T will need to address is how the company will deal with video streaming. In May last year, AT&T, which is the 2nd largest wireless provider in the U.S., offered to purchase DirecTV which is the largest satellite TV provider in the country. The goal is to create the biggest pay TV company in the U.S. This deal shows that AT&T is looking to find new avenues of growth which goes beyond the competitive and growing cellular business. On Tuesday, the shares of DirecTV traded at $90.83 a share, up 1.6% while the shares of AT&T traded at $33.71, up 0.7 percent.
On Tuesday, stocks in the U.S. declined for the 2nd straight session. These losses however were modest as the indices recovered from a bout of selling which was linked to Treasury yield fluctuations. This selling followed a sharp decline in European bonds since as yields rise, the prices of bonds fall. According to some analysts, as a result of expectations of a rise in inflation in the euro zone, bond prices were driven down with yields higher. On Tuesday, the 10 year bund in Germany increased by almost 0.7 percent. This was up from Monday’s level of 0.62%. At the close of trading, the Nasdaq Composite index (COMP) dropped 0.4%, or 17.38 points, to 4,976.19. Also on the downside was the S&P 500 index (SPX) which declined 0.3%, or 6.21 points, at 2,099.12. As a result of an increase in oil prices, energy stocks advanced while 8 out of the 10 main sectors on the index finished lower. Meanwhile, the Dow Jones Industrial Average (DJIA) which dropped as much 141 points during the session, ended the day down 0.2%, or 36.94 points, at 18,068.23.
On Tuesday, in forex trading, the U.S. dollar (USD) traded lower. This came in response to a renewed selloff in European stock markets as well as government bonds. On a day where no economic data was released out of the U.S., the euro traded higher with EUR/USD trading at 1.1240, up 0.77 percent. This increase came as a result of a selloff in the global bond market which pushed the greenback down. On Tuesday, the 10 year bund yields increased in Germany and as a result, the cap with their US counterparts was narrowed. The German bund yields act as benchmarks for the financial markets in Europe and higher yields translate into a higher euro against the USD. Meanwhile, the USD/JPY traded at 120.03 while the GBP/USD traded at 1.5647, up 0.38 percent. Also, the AUD/NZD traded at 0.7965, up 0.94% while the USD/CHF traded at 0.9264, down 0.83%. The U.S. dollar index was at 94.48, down 0.66%.
In Asia, in early morning trading on Wednesday, crude oil prices gained. This came after data released yesterday showed a sharp decline in U.S. crude supplies last week. In their weekly report, the American Petroleum Institute stated that the crude supplies last week dropped by 2 million barrels. Meanwhile, the gasoline inventories last week also declined by 1.6 million barrels. Today, investors are waiting for the stockpile data for last week which will be released by the Department of Energy. WTI crude for delivery in June traded at $61.46 a barrel, up 1.07% on the NYMEX. Also, on Tuesday, Brent crude oil for delivery in June traded at $66.86 a barrel, up 3.00%, or $1.95, on the Intercontinental Exchange (ICE).