Here is what you need to know.
ABInBev upped its takeover off for SABMiller. ABInBev has raised its takeover bid for rival SABMiller to $US103.9 billion. The latest offer equates to $US64.30 per share, which is up from the previous two offers of $US57.96 and $US61. SAB suggested, “ABInBev is very substantially undervaluing SABMiller.” It appears SAB is likely to reject the offer.
Volkswagen is planning a big recall. Volkswagen plans to recall the cars affected by its diesel emissions crisis. CEO Matthias Mueller told the Frankfurter Allgemeine Zeitung (FAZ), “If all goes according to plan, we can start the recall in January. All the cars should be fixed by the end of 2016.” The size of the recall has not yet been announced.
Yum Brands missed on the top and bottom lines. The fast-food giant announced earnings of $US1.00 per share, missing Bloomberg’s consensus estimate of $US1.06. Revenue edged up 2.2% compared to a year ago to $US3.43 billion, which was shy of the $US3.67 billion that was anticipated. CFO Greg Creed noted the second half of the year has been bumpier than expected for its China division, but same store sales still increased 2% and restaurant margins were 20%. “The pace of recovery in our China Division is below our expectations,” the company said. Shares are down 17% in pre-market trade.
Samsung’s quarterly profit surged. The electronics maker saw quarterly profits climb nearly 80%, boosted by sales of chips and TVs. Samsung’s flagship smartphone business struggled as consumers favoured devices other than the Galaxy S6. According to AFP, Samsung’s quarter was helped by the weak Korean won, which is down 12% year-to-date versus the dollar. Shares of Samsung rallied almost 9% in South Korean trade.
The IMF cut its global growth forecast. The International Monetary Fund sees global growth of 3.1% in 2015 and 3.6% in 2016, down from its previous forecasts of 3.3% and 3.8%, respectively. According to the IMF, 2015 looks like it will be the worst year for the global economy since 2009, the heart of the financial crisis. For the US, the IMF sees 2015 growth of 2.6% and 2016 growth of 2.8%. “Near-term economic growth still looks stronger in advanced economies, compared with the recent past, but weaker in the emerging market and developing economies,” the report said. As for China, the IMF sees 2016 growth of 6.3%, its weakest in a quarter century.
The Bank of Japan kept policy on hold. In an 8-to-1 vote, Japan’s central bank refrained from expanding its asset purchase program despite growing fears of a slowdown in the Japanese economy. In it’s statement, the BoJ noted, “Exports and industrial production have recently been more or less flat, due mainly to the effects of the slowdown in emerging economies.” The central bank continued, “The year-on-year rate of change in the CPI is likely to be about 0 per cent for the time being, due to the effects of the decline in energy prices.” The Japanese yen is little changed near 120.05 per dollar.
UK data was mixed. Industrial production surged 1% month-over-month, beating the 0.3% gain that was expected. The strong August reading has industrial output up 1.2% compared to last year. Meanwhile, manufacturing production climbed 0.5% mum, but a large revision to the previous data left the year-over-year reading down 0.8% over the last 12 months. The British pound is stronger by 0.6% at 1.5313.
Stock markets around the world are firm. Germany’s DAX (+0.8%) paces the gain in Europe after Hong Kong’s Hang Seng (+3.1%) led the advance in Asia. China’s Shanghai Composite remained closed for Golden Week. Here in the US, S&P 500 futures are up 9.00 points at 1977.50.
US economic data remains slow. Crude oil inventories will be released at 10:30 a.m. ET and consumer credit will cross the wires at 3 p.m. ET. Treasury will reopen $US21 billion 10-year notes at 1 p.m. ET. The US 10-year is higher by 4 basis points at 2.07%.
Earnings reports pick up a bit. Constellation Brands, Global Payment, Monsanto and RPM Inc all report ahead of the opening bell.