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6 Feb 2013
Forex Flash: US markets rebound yesterday on upbeat data and Dell – Deutsche Bank
Yesterday, better-than-expected services sector data across both North America and Europe and Dell's announcement that it had agreed to be taken private fuelled a +1.4% rally in Tech stocks yesterday which lifted the S&P500 +1.04% higher on the day to almost recover from the previous day's losses.
In particular, “Dell's $24.0B transaction, which is being billed as the largest LBO since the financial crisis, has obviously reignited chatter about the return of jumbo LBOs to the US market. However, we should point out a couple of nuances to the transaction which make this not your typical LBO including the heavy support of Michael Dell himself who is the founder, CEO and a leading shareholder as well as assistance from Microsoft who will tip in with a hefty $2.0B loan in order to support the long term success of the entire PC ecosystem. Nevertheless, there's no doubt the transaction will be used as a positive for equities and yesterday's moves in tech stocks was a reflection of this.” Notes the Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank.
In addition, market sentiment was also encouraged by what was a fairly good day for corporate earnings. 27 S&P500 companies reported yesterday with over 70% beating EPS expectations, and two-thirds of companies topping revenue estimates - consistent with the overall ratios for this quarter's US reporting season.
In particular, “Dell's $24.0B transaction, which is being billed as the largest LBO since the financial crisis, has obviously reignited chatter about the return of jumbo LBOs to the US market. However, we should point out a couple of nuances to the transaction which make this not your typical LBO including the heavy support of Michael Dell himself who is the founder, CEO and a leading shareholder as well as assistance from Microsoft who will tip in with a hefty $2.0B loan in order to support the long term success of the entire PC ecosystem. Nevertheless, there's no doubt the transaction will be used as a positive for equities and yesterday's moves in tech stocks was a reflection of this.” Notes the Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank.
In addition, market sentiment was also encouraged by what was a fairly good day for corporate earnings. 27 S&P500 companies reported yesterday with over 70% beating EPS expectations, and two-thirds of companies topping revenue estimates - consistent with the overall ratios for this quarter's US reporting season.