Here is what you need to know.
Royal Dutch Shell bought BG Group for approximately $US70 billion. The deal makes Royal Dutch Shell the world’s second largest oil and gas company. BG shareholders will receive about $US5.70 in cash and 0.4454 Shell B shares for each BG share. The deal values BG at a 50% premium from yesterday’s closing price.
Iran will join the China-led Asian Infrastructure Investment Bank. Reuters reports, “The decision was made by existing members, including China, Britain, France, India and Italy.”
Greece Prime Minister Alexis Tsipras is meeting with Russian President Vladimir Putin in Moscow. Expectations for any sort of debt deal remain low as Russia is struggling with its own economic weakness. However, the two sides may discuss a deal that would lift Russia’s food import ban. Greece’s 3-year yield is up 26 basis points at 21.10%..
The Bank of Japan kept policy on hold. Members voted 8-1 in favour of keeping the central bank’s aggressive asset purchase program in place. Board member Takahide Kiuchi was the lone dissenter, calling for the BOJ to cut its asset purchases to 45 trillion yen per month (currently 60 to 70 trillion yen per month) and make its 2% inflation target a longer term objective instead of a benchmark that should be met in “about two years.” Japan’s yen is stronger by 0.5% at 119.71 per dollar.
German factory orders posted a surprise drop. Factory orders fell 0.9% month-over-month in February, missing the expected 1.5% mum increase. The Economy Ministry noted, “Due to weak bulk orders, demand was significantly weaker in the first two months;” however, “sentiment indicators are sending positive signals. Overall, the trend in the industry should continue to point moderately upward.” Germany’s 10-year yield is down 3 basis points at a record low 0.156%.
Switzerland became the first country to sell 10-year debt at a negative yield. The country sold CHF232.5 million worth of 10-year bonds at a yield of -0.055%. February’s auction drew 0.011%. Switzerland’s 10-year yield is currently little changed at -0.08%.
Saudi Arabia is producing crude oil at a record pace. Saudi oil minister Ali al-Naimi announced production of 10.3 million barrels per day, slightly outpacing the 10.2 million barrels per day produced in August 2013. The number is the highest since record keeping began in the early 1980s. West Texas Intermediate crude oil is down 2.2% at $US52.82 per barrel.
Alcoa unofficially begins earnings season. The former Dow component will release its first quarter results following the closing bell. Analysts are looking for adjusted earnings of $US0.26 per share on revenues of $US5.94 billion.
Global stock markets are mixed. Hong Kong’s Hang Seng (+3.8%) led the way in Asia as traders returned to work following the extended holiday weekend and China’s Shanghai Composite (+0.8%) crossed the 4,000 level for the first time in seven years. In Europe, Britain’s FTSE (+0.5%) leads and Italy’s MIB (-0.5%) lags.
The Fed will release the minutes from the March FOMC meeting. The minutes will cross the wires at 2 p.m. ET. There is no economic data scheduled. Treasury will reopen $US21 billion 10-year notes at 1.pm. ET. The US Dollar Index is lower by 0.4% at 97.40.