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Musk revives $44 billion offer for Twitter

 

Thursday, October 06, 2022

The news shaping the markets today

Six Iranian-made drones hit a building in a town near Ukraine’s capital Kyiv. The ongoing war sent the WTI crude oil prices higher this morning.


Hong Kong’s S&P Global PMI fell to 48.0 in September, from 51.2 in the previous month. Although this was the first decline in private sector activity since March, the HKD/USD forex pair remained almost flat.


Australia’s trade surplus shrank to a six-month low of A$8.32 billion in August, from A$8.97 billion in the prior month. However, the AUD/USD pair rose in forex trading this morning.


Philippines’ unemployment rate fell sharply to 5.3% in August, from 8.1% in the year-ago month, lending support to the PHP/USD forex pair.


South Korea’s foreign exchange reserves contracted to $416.77 billion in September, from $436.43 billion in the previous month. Despite this, the KRW/USD pair rose in forex trading this morning.

 

What’s happening: Elon Musk renewed his deal to buy Twitter in a deal valued at $44 billion.

What happened: Musk reversed course to send a letter to the social media platform’s litigation staff, stating his intention to proceed with the acquisition.

However, the legal battle between Musk and Twitter is expected to continue.

Why it matters: Twitter had filed a lawsuit after Musk backed out of the agreement in July, citing concerns over the number of fake accounts on the social media platform. Musk had sold more than $15 billion worth of shares in Tesla earlier in the year to fund the buyout transaction. The case had been scheduled to go on trial on October 17.

Elon Musk and his team of advisors have now sent a letter to Twitter stating the intention to proceed with the acquisition of Twitter at $54.20 per share. There are speculations of Musk needing to sell another $2 billion worth of Tesla shares to fund the deal.

Shares of Twitter were halted in the afternoon trading session on Tuesday, after Bloomberg reported about the letter. Shares of the social media platform jumped more than 22% in late trading session on Tuesday, following the resumption of trading after a 13D filing by Musk confirmed the report.

The revival of Elon Musk’s buyout deal for Twitter resulted in several analysts raising the price target for the social media company. Rosenblatt Securities raised the price target from $37 to $54.20, reflecting the buyout price.

How shares responded: Twitter’s shares surged over 22% to close Tuesday’s session but fell 1.4% to close at $51.30 on Wednesday. The stock has gained just 1% over the past six months.

What to watch: Investors will keep an eye on the ongoing negotiations between both the parties. Markets expect the litigation to end soon and for the deal to get the necessary approvals.

The markets today

The Canadian dollar will be in focus today ahead of Ivey PMI data

Context: The Canadian dollar declined against the US dollar on Wednesday following the release of economic data.

Details: Domestic data released on Wednesday showed a decline in exports during August, which exerted pressure on the Canadian dollar despite higher crude oil prices.

Canada’s trade surplus shrank to C$1.5 billion ($1.1 billion) in August and came in much below market expectations of a surplus of C$3.45 billion and the C$2.37 billion surplus recorded in July. Exports shrank 2.9% during the month, also falling 1.3% on a volume basis, while prices also declined for the third month in a row.

The US dollar index, which measures the greenback’s performance versus a basket of major peers, surged on Wednesday, after data from the US showed private employers increasing hiring in September.

“It appears to be a wave of broad U.S. dollar buying. Notably the rebound in oil prices and equities is providing only minimal support to the Canadian dollar here against a resilient greenback,” Wells Fargo analyst Erik Nelson said in a note to clients.

The rise in prices of crude oil, one of Canada’s major exports, limited the overall decline for the Loonie. WTI crude oil prices gained 1.4% to $87.76 per barrel on Wednesday.

The CAD/USD forex pair fell around 0.7% to $1.3621 on Wednesday, after the Loonie retreated from its highest intraday level in eleven days during the prior session.

What to watch: Traders await the release of data on Canada’s Ivey Purchasing Managers Index today. The Ivey Purchasing Managers Index, which rose to 60.9 in August, is expected to decline to 55 in September. Markets will also keep an eye on the movement in crude oil prices.

Other Markets: European trading indices closed lower on Wednesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 down by 0.48%, 1.21%, 0.90% and 1.02%, respectively.

Support & resistances for today

Technical Levels News Sentiment
USD/JPY  – 144.64 and 144.69 Positive
USD/CHF – 0.9810 and 0.9821 Positive
Gold – 1728.01 and 1731.01 Positive
Copper  – 3.5653 and 3.5840 Negative
FTSEE 100 – 7035.41 and 7064.23 Positive

Market snapshot

Futures at 0400 (GMT)
EUR/USD (0.9916, 0.31%) Dow ($30,438, 0.42%) Brent ($93.59, 0.2%)
GBP/USD (1.1360, 0.29%) S&P500 ($3,812, 0.46%) WTI ($87.97, 0.2%)
USD/JPY (144.61, -0.05%) Nasdaq ($11,692, 0.59%) Gold ($1,731, 0.6%)

What else to watch today

Germany’s factory orders, new car registrations and construction PMI, Spain’s industrial production, Eurozone’s construction PMI and retail sales, France’s construction PMI, new car registrations and retail sales, Italy’s construction PMI and car registrations, UK’s construction PMI, Mexico’s auto exports, car production and gross fixed investment, India’s money supply M3, Turkey’s gross foreign exchange reserves, US Challenger job cuts, initial jobless claims, continuing jobless claims and natural gas stocks change, Brazil’s Car production and new vehicle registrations, as well as Argentina’s industrial production.


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