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Market Update

S&P 500 Nears 2,000 and European Markets Await Stimulus Measures


Author: Nichole Harper
ticker.com
Last Update: 10:52 AM ET August 25 2014

10:50 AM New York – U.S. market indexes traded higher and European markets advanced. ECB President Mario Draghi signalled willingness to announce more monetary steps to revive economic growth in the euro zone. The euro traded lower and French government collapsed.

Stocks opened higher and market indexes advanced on Wall Street following a rise in European markets.

European markets jumped on the hopes that the European Central Bank is closer to approving additional stimulus measures as the economy struggles and unemployment remains near a record high.

S&P 500 index increased 10.37 or 0.5% to 1,998.77 and the Nasdaq Composite Index gained 0.6% or 25.60 to 4,564.07.

New home sales declined 2.4% to 412,000 annual rate in July, the Commerce Department reported today in Washington. The home sales declined for the second month as the housing recovery remains uneven.

Burger King and Tim Hortons Talk Merger

Burger King Worldwide Inc., the second largest U.S. fast food chain, is in talks to acquire Canada based Tim Hortons Inc and move its headquarters to Canada and take advantage of lower-tax country.

The merged company would have $22 billion in sales and more than 18,000 restaurants in 100 countries, according to the statement released by the company.

The merger of two companies will create the third largest fast food chain and Burger King plans to relocate to Canada to take advantage of its lower corporate rate of 26.5% compared to 40% rate in the U.S.

The two chains will operate as a standalone brands and 3G Capital, which has a 70$ stake in Burger King, would be the majority owner in the company.

Tim Hortons, based in Oakville, Ontario, stock jumped 3% to C$68.72 and the coffee and doughnut operator has 4,500 restaurants.

European Markets

European markets closed higher after European Central Bank President Mario Draghi signalled more quantitative easing steps and France overhauled cabinet after the government collapsed.

The expectations rose for another round of stimulus and market indexes rose and bond yields fell.

Draghi said that investor expectations of inflation have dropped and the rate setting committee will take this into account.

“The Governing Council will acknowledge these developments and within its mandate will use all the available instruments need to ensure price stability over the medium term,” Draghi said at the Federal Reserve Bank of Kansas City’s annual economic symposium.

The euro declined to 11-month against the dollar and fell 0.3% to $1.3199 and the yield on Italian 10-year government bond dropped to 2.462% and the equivalent Spanish yield declined to an all-time low of 2.23%.

Germany’s two-year note yield decreased 4 basis points to minus 0.04%, the lowest since December. Belgian two-year note also traded at negative yield but recovered to close at 0006% and 10-year rate fell six basis points to 1.28%.

French President was forced to overhaul the cabinet for the third time in two years after warring factions forced the resignation of Prime Minister Manuel Valls after critical comments from Economy Minister Arnaud Montebourg over the weekend.

Asian Markets

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc