European stocks are hot this morning, on news of a mega-merger in the petroleum sector. Royal Dutch Shell will pay over $70 billion in cash and stock to acquire BG Group, in the largest takeover in the oil sector in ten years.
This follows on the heels of another huge acquisition, when FedEx announced plans to assimilate a major European rival. Mergers and stock buybacks seem to be the big driving factors for stock prices recently, offsetting disappointing economic data.
Gold is near unchanged this morning, still holding comfortably above the $1200 mark. Silver and the PGMs are moderately lower.
Yesterday in the Markets
Wall St. opened higher Tuesday, maintaining gains until a drop of all three indices hit in the final hour of trading to end the day. The dollar saw moderate gains after sinking the previous session, which helped pull gold down from Monday’s six-week high. European and Asian stocks gained.
Factors Affecting Gold Today
The minutes of the Federal Reserve Open Market Committee (FOMC) meeting in March are due for release today, giving us an inside look at the thought processes behind the powerful policy-making committee’s actions. This has the US dollar giving up gains from yesterday, as investors guard against news that the Fed may delay bringing interest rates back up from near zero. The lower dollar is helping support gold prices.
The surge in Asian and European stocks are pulling money out of safe havens such as gold today. Crude oil futures reversed yesterday’s rally on news that US petroleum stockpiles increased at triple the expected rate this week, while Saudi Arabia announces record oil production for March – 10.3 million barrels a day. Iraq and Libya also reported higher oilfield production.
McEwen Mining reported that armed bandits raided one of their mines in Mexico, making off with 900 kg of gold concentrate that contained 7,000 ounces of gold, with a market value of $8.5 million.
In London, thieves hit the famous Diamond District over the Easter holiday. stealing the contents of over 300 safety deposit boxes in a vault. The extent of the take, believed to be large amounts of cut and uncut diamonds stored by diamond brokers, as well as the stock for many luxury jewellery businesses, is unknown at this time. One jeweler, not wishing to give his name, was quoted as saying: “You are looking at tens and tens of millions, maybe hundreds of millions. This could be devastating for many people whose livelihoods depend on dealing with jewellery. They will have insurance, but you can’t operate without stock.”
Tomorrow gives us merchandise trade numbers and industrial production out of Germany, a policy statement from the Bank of England (voted the central bank most likely to raise rates other than the Fed,) and first-time jobless claims in the US.
Watch for the jobless claims to come under additional scrutiny, after the disastrous non-farm payrolls report last week, as markets attempt to guess what the Fed’s plans regarding interest rates are.
by Steven Cochran