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.
INDICES
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.
CURRENCIES
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%.
COMMODITIES
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).
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