Here is what you need to know.
The Bank of Japan shocked the market. In a surprise 8-to-1 vote, the BOJ held its asset purchase program at an annual rate of around 80 trillion yen. Most economists had expected the central bank to increase the size of its program. Additionally, the BOJ held its key interest rate at -0.10% and lowered its growth and inflation forecasts for the next couple of years. The bank now expects CPI to hit its 2% target during fiscal year 2017, ending in March 2018. Previously it had forecast it would reached its 2% target during the first half of the fiscal year. The Japanese yen is up 3.1% at 108.08 per dollar, and is threatening its best close in 14 months.
The Reserve Bank of New Zealand says further rate cuts might be necessary. New Zealand’s central bank held its benchmark interest rate at 2.25%, as expected. The key part of the RBNZ’s statement was when it discussed a “material decline in shorter-term [inflation] expectations,” and suggested further policy easing might be required. The New Zealand dollar is stronger by 1.6% at .6961.
Abbott is buying St. Jude for $25 billion. The deal is worth about $85 per share, a 37% premium to Wednesday’s closing price. St. Jude shareholders will receive $46.75 in cash and 0.8708 Abbott shares per St. Jude share. “Together, the company will compete in nearly every area of the cardiovascular market and hold the No. 1 or 2 positions across large and high-growth cardiovascular device markets,” the statement said.
Facebook crushed estimates. The social media giant announced earnings of $0.77 per share, well ahead of the $0.62 that was expected. Revenue surged 52% year-over-year to $5.38 billion, beating out the $5.25 billion that Wall Street was looking for. Monthly active users came in at 1.65 billion while monthly mobile active users totaled 1.51 billion. Facebook announced it would be offering a new C class of shares that wouldn’t have voting rights.
Bill Ackman and Valeant execs were grilled by a Senate committee. Outgoing Valeant CEO Michael Pearson, former interim CEO Howard Schiller, and hedge fund titan Bill Ackman appeared before a Senate committee to answer questions about the company’s practice of buying drugs and then raising their prices. One of the highlights of the testimony was when ranking committee member Claire McCaskill (D-Missouri) asked, “Can you find me one drug that Valeant didn’t raise the price on?” Neither Pearson nor Ackman could answer the question.
Deutsche Bank had a ‘challenging’ quarter. The German investment bank saw Q1 profit plunge 58% to €236 million ($268 million), beating the €249 million loss that was expected by a Reuters poll. “Financial markets were challenging during the first quarter, largely reflecting concerns about the outlook for the global economy,” co-CEO John Cryan said. That was reflected in the numbers as debt sales and trading revenues tumbled 29% versus a year ago to €2 billion euros, and equity sales and trading revenues saw an identical 29% drop to €728 million.
Anglo American is selling assets. The mining giant has agreed to sell its Niobium and Phosphates businesses to state-owned China Molydenum for $1.5 billion. The sale helps Anglo pay down some of its $12.9 billion debt pile. Back in February, the company said it would sell $5-$6 billion worth of assets and reduce its staff by more than 50% in an effort to shrink its debt load below $10 billion. “This Transaction confirms our commitment to creating the new Anglo American, positioned to deliver robust profitability and cash flows through the price cycle,”CEO Mark Cutifani said in a statement.
Earnings reporting remains heavy. Aetna, Altria, Bristol-Myers, CME Group, ConocoPhillips, Dunkin Brands, Ford Motor, MasterCard, Sony, Time Warner, and UPS are among the names releasing their quarterly results ahead of the opening bell. Amazon, Banco Santander, Groupon, and LinkedIn highlight the companies reporting after markets close.
Stock markets around the globe are mostly lower. Japan’s Nikkei (-3.6%) led the losses overnight while Australia’s ASX (+0.7$) outperformed. In Europe, Spain’s IBEX (-2.1%) paces the decline. S&P 500 futures are -16.50 at 2074.25.
US economic data flows. GDP and initial and continuing claims will cross the wires at 8:30 a.m. ET. US natural gas inventories will be released at 10:30 a.m. ET. The US Treasury will hold a $28 billion 7-year note auction at 1 p.m. ET.
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