It’s not often a corporate deal hits markets around the world but that’s what Amazon’s $US13.7 billion deal to buy organic supermarket chain, Whole Foods which not only rocked listed US retail stocks – including giants like Wal-Mart and Target – but was also felt in Europe.
The wider Wall Street and European markets absorbed news of the shock Amazon bid (see separate story) on the whole, but while eurozone shares rose 0.7%, gains in the US by the end of the session were small – 0.1% for the S&P 500 as tech stocks again dragged.
The MSCI Emerging Market Index fell 0.1% for a 1.4% decline over the week.
A rise in iron ore prices and the gains offshore saw ASX 200 futures rise 9 points or 0.2%, pointing to a mildly positive start to trade for the Australian share market later today.
The ASX 200 index and the All Ordinaries each rose 0.2% on Friday to be 1.7% and 1.6% over the week to 5,774 points and 5,808.2 points, respectively.
But local retail stocks will be watched closely (see separate story) today and we shouldn’t be surprise if the initial reaction to the Amazon move is negative.
By the close on Saturday morning global share markets were had ended what was a soft week with US shares up just 0.1% as tech stocks continued to correct, eurozone shares down 0.5%, Japanese shares down 0.4% and Chinese shares down 1.6%.
And while Australian shares managed a solid 1.7% rebound, that was after falling 5% off early May highs.
It was also helped by fund flows into superannuation ahead of a June 30 deadline for some members are likely providing a strong source of demand which is likely to intensify into month end.
Bond yields fell in the US on low US inflation data but were little changed elsewhere. Prices for oil, gold and copper fell but iron ore managed a gain. The $A also had a bounce past 76 US cents to 76.16 cents (where are all those gloomsters forecasting a big fall?) thanks to stronger Australian May jobs data on Thursday.
The Dow rose 24.38 points, or 0.11%, to end at 21,384.28, the S&P 500 was up 0.69 of a point, or 0.03%, to 2,433.15, but the Nasdaq Composite dropped 13.74 points, or 0.22 percent, to 6,151.76.
Wal-Mart shares sank 4.7% in reaction to the Amazon news (weighing the most on the Dow), while shares of Target, Walgreen Boots, Kroger and Costco fell between 5% and more than 9%.
“It’s going to send a shock wave across the board, and this represents the true utmost in market disruption,” said Burns McKinney, chief investment officer with the Dallas investment team for Allianz Global Investors told Reuters. “there’s big winners and big losers.”
Amazon shares closed up 2.4%, making the stock the biggest boost to the S&P 500 (and why it ended a touch higher on the day. Whole Foods shares surged 29.1%. Amazon added $US14 billion in value (thereby paying for the deal in a way) while Whole Foods’ value jumped $US4 billion.
Investors already sees gains for Amazon, but Whole Foods has been floundering lately and in the three months to March reported a 1.1% rise in revenue to $US3.7 billion in its most recent quarter, but saw profits slide 30% to just $US99 million.
