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BP Exits Petrochemical Business in $5 Billion Deal
Topic of the day
Energy giant BP PLC has agreed to sell its petrochemicals business to British chemical company Ineos Ltd., in a $5 billion deal that will help reshape its business for the global transition to lower-carbon energy, BP said. The deal could help BP pare its relatively high debt load and separates the company from its peers, as Royal Dutch Shell PLC and Exxon Mobil Corp. have been expanding their petrochemicals businesses. BP said it would have taken considerable investment to enlarge the division, which is smaller than its peers' businesses. Petrochemicals are expected to be the largest driver of oil demand in the coming years, making up more than one-third of oil-demand growth to 2030, according to the International Energy Agency. BP and Ineos first proposed the deal several years ago and discussions were reignited in recent months, according to people familiar with the matter. The companies didn't use advisers for the deal. Ineos, one of the world's largest petrochemical companies, bought the bulk of BP's petrochemicals business in 2005 for $9 billion. It is the first multibillion-dollar deal by an oil major since the new coronavirus caused companies to cut costs and scale back investment plans.
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After a weak close the previous week, the SMI Monday closed up just 0.2 percent on 10,060 points. Gainsremained limited, with concerns rife about the rising numbers of new coronavirus case in some countries, especially the US. On the other hand, hopes of an economic recovery were buoyed by potential easing of lockdown measures, as the UK plans to loosen travel restrictions and maybe lift quarantine rules. Banks were sought Europe-wide on hopes of a mild outcome for the pandemic. Credit Suisse rose 1.5 percent and UBS 0.7 percent. Other cyclicals were in demand too, with ABB up 1.5 percent and Lafargeholcim 1.6 percent. Novartis closed up 0.2 percent despite the news it has withdrawnits application for European approval of its dry eye disease drug Xiidra. Online chemist Zur Rose surged 3.2 percent as two analyst groups raised their targets for the stock and reiterated their buy recommendation following Zur Rose’s acquisition last week of Germany’s fifth-largest online chemist Apotal.
European stocks rise as traders shrug off an increase in coronavirus cases in parts of the US and cheer improved economic data. The Stoxx Europe 600 rises 0.4%, the FTSE 100 gains 1.1%, the DAX advances 1.2% and the CAC-40 increases 0.7%. Worries about resurgence of coronavirus cases in the US were offset by positive data on US pending home sales, German inflation and euro-area economic sentiment. BP gains 3.4% after the European oil major agreed to sell its global petrochemical business. Broadcaster ITV rises 2.9% after saying would start filming entertainment shows again following the coronavirus lockdown. Travel stocks, including British Airways owner IAG and TUI, rally after the UK government said it would relax its travel restrictions. Shares in troubled Wirecard soared Monday on talk that French rival Worldline and other private investors are interested in snapping up parts of the German online-payment company. Wirecard, which filed for insolvency last week, said it was still trading and a decision about whether to open insolvency proceedings remained under review. Shares traded 158% higher at EUR3.30, though shares are down around 97% in the year to date.
US stocks rally on optimism central banks will provide more stimulus. But coronavirus cases rise, with hot spots Florida, Texas, California and Arizona imposing restrictions and pulling back on reopening plans. The Dow gains 2.3% to 25595, the S&P 500 rises 1.5% to 3053 and the Nasdaq increases 1.2% to 9874. Boeing soars 14% after US air-safety regulators said they'd begin flight tests for the 737 MAX. Facebook rises 2.1%, reversing earlier losses driven by brands, citing hate speech and divisive content, pulling advertising from the platform. Investors await Thursday's monthly jobs report, and markets are closed Friday in observance of Independence Day. Pacira Biosciences surges as the FDA once again says it won't approve a postoperative pain drug from Heron Therapeutics that's been viewed as a potential rival to Pacira's Exparel. Analysts at Piper Sandler think the issues raised in the FDA's second rejection of Heron's application translate into another lengthy regulatory delay for HTX-011. Pacira up 17% to $51.70 after earlier hitting a 52-week high of $52.34. Heron off 26% to $14.60.
Japanese stocks were broadly higher, with electronics stocks rising especially sharply, as the yen weakens. Hong Kong's Hang Seng index was up 1.0%, tracking a rebound in regional markets from Monday's losses. An official gauge of China's factory activity rose to a three-month high in June, bolstered by improving demand.
U.S. government yields clung near recent lows even as stock markets rebounded Monday. The yield on the benchmark 10-year U.S. Treasury note closed at 0.636%, unchanged from Friday, when yields posted the largest three-week decline since the week ended April 3. The two-year yield ended the day at 0.158%, down from 0.160% Friday.
Bryan Garnier raises H&M target to 180 (170) SEK - Neutral
BoA downgrades Hugo Boss to Underp. (Neutral) – Target 20 EUR
Bryan Garnier raises Biontech target to 50 (45) USD - Buy
UBS downgrades Danone, Unilever to Sell - Reckitt to Buy (Neutral)
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