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(Il Sole 24 Ore Radiocor) – American stock markets stuck in the first session of May awaiting indications from the Federal Reserve at the end of the two-day meeting of the FOMC, the operating arm of the US central institute. On Wall Street the indices did not move away from parity on a day of reduced trading due to the closure of European stock markets for the May 1st holiday. Returning to the Fed, if the confirmation of interest rates at the current level (5.25%-5.50%, the highest in the last 23 years) is a given, the market will look for clues in the words of President Jerome Powell to understand when it will be possible the expected easing of monetary policy will arrive.
Quarterly accounts push Amazon
On the stock front, Amazon is leading the gains on the Dow Jones with an advance of close to 3 percentage points after reporting better-than-expected earnings in the first quarter. Pfizer also did well after the results for the January-March period beat Wall Street’s expectations and the upward revision of the annual profit forecasts. Also in the pharmaceutical sector, CVS shares are plummeting after first-quarter profits and revenues fell short of estimates: the chain has cut its profit outlook for the full year, citing higher medical costs. Johnson & Johnson is gaining ground after announcing it has settled nearly all ovarian cancer lawsuits related to the use of its talc by paying $6.5 billion. Money on Microsoft, which signed a deal to invest more than $10 billion in renewable energy capacity to power data centers.
US labor market stronger than expected
Meanwhile, on the macro front, the April ADP report on jobs in the private sector recorded surprising data which shows the resilience of the market and which may give the Fed arguments to wait for inflation to fall before cutting rates. According to the monthly report drawn up by Automatic data processing (ADP), the agency that prepares pay slips, 192 thousand positions were created, while analysts expected 183 thousand. Contrasting signals, however, on manufacturing activity. The IHS Markit PMI index was better than forecast and, according to the definitive reading in April, fell to 50 points from 51.9 in March. Expectations were for a figure of 49.9 points as in the preliminary reading. The ISM index, however, fell to 49.2 points from 50.3 points in March, compared to expectations for a figure of 50.1 points.
Finally, the data on construction expenditure was worse than estimates, falling in March by 0.2% monthly against expectations for an increase of 0.3%. On an annual basis the figure shows an increase of 9.6 percent.
BBVA aims at Sabadell with an 11.5 billion operation
In Europe, news emerges on the offer presented by BBVA for an aggregation with Banco Sabadell. The Basque institution has developed a deal that values the target bank at 11.5 billion. The operation would see the exchange of one new Bbva share for every 4.83 Sabadell shares, with a premium of approximately 30% compared to the closing price on April 29th. BBVA also tries to reassure the unions about the consequences of the operation, promising to avoid “traumatic measures” against employees. «After the merger, the shareholders of Banco Sabadell will have 16% of the new institution», specifies the Basque bank, which proposes a double headquarters for the future, including one in Barcelona, and assures that it wants to «preserve the culture of the two entities» . The operation, adds BBVA, will create a “more solid and efficient” entity thanks to the “complementarity” of the two institutions, creating “one of the most important and solid financial institutions in Europe, with total assets of over one thousand billion and more than 100 million customers worldwide.” «This larger scale» would allow the two banks to «better address the structural challenges of the sector».
