U.S., Asian and European shares moved lower on Monday after the highly controversial merger between Pfizer Inc (N:PFE) and Allergan (N:AGN_pa). The dollar moved lower against its major rivals as the market weighs in on the Federal Reserve’s likely December interest rate hike.
U.S. stocks erased more gains made last week when major benchmarks saw some of their best weekly results in months. Trading volume was relatively low, possibly reflecting the holiday atmosphere ahead of Thanksgiving Day, during which markets will be closed. The S&P 500 shed 2.58 points, or 0.12%, to trade at 2,086.59 as six of its ten main sector finish in the red. Consumer and energy sectors led the gainers, although they were eclipsed by heavy declines in the telecom, utilities and tech sectors. The Dow Jones Industrial Average declined 31.13 points, or 0.17%, to trade at 17,792.68 as more than two-thirds of its components closed the day lower. The Nasdaq Composite declined 2.44 points, or 0.05%, to close Monday’s trading session at 5,102.48. Historically, Thanksgiving week trading tends to have low trading volume despite the release of key economic data this week, with pace picking up in December. Despite expectations, the $155 billion merger between Pfizer Inc (N:PFE). and Allergan PLC failed to lift the markets, despite the creation of worlds largest drug maker. Both companies saw their shares decline following the announcement as criticism was pointed at some of the specifics of the deal, which could be viewed as an attempt to evade U.S. taxation by moving operations to Ireland.
Asian shares followed Wall Street’s lead, posting declines during early trade. MSCI's broadest index of Asia-Pacific shares outside Japan moved between positive and negative territory, and was up 0.2% as of this writing. The Japanese Nikkei 225 dipped about 0.1 percent after a long holiday weekend but recovered to a 0.3% gain over the session. Chinese shares also moved lower, as the blue chip CSI 300 index of the largest listed companies in Shanghai and Shenzhen was last seen 1.2% lower. The Shanghai Composite Index was last seen down around 0.4%. The focus in Japan is moving away from earnings reports and towards China. The second largest economy in the world has recently taken some drastic steps in order to secure economic growth, though August’s sudden devaluation of the yuan resulted in considerable volatility worldwide. Asian markets are also focused on the U.S. Federal Reserve and its likely interest rate hike next month.
This week’s major economic data releases continue today with the release of German GDP and business climate data and will continue with U.S. GDP and consumer confidence data. U.S. personal spending, employment, durable goods orders and oil stock data will be released on Wednesday. U.S. trade will be closed for Thanksgiving Day on Thursday.