The Australian market was modestly higher last week, helped by some Mergers & Acquisitions activity. Westfield spiked as the shopping mall giant announced that Europe’s largest listed property group, Unibail-Rodamco, wants to acquire Westfield in a cash and scrip offer valuing the company at A$10.01 per security as at 11 December. In economic news, labour market data showed an employment increase of 61.6k which was more than expected. This helped the Australian dollar move to its highest level against the greenback in more than a month. The best performing sectors in the market were real estate (driven by the offer for Westfield), energy and materials. The worst performers were utilities, health care and financials. Cleanaway Waste Management was one of the best performing companies in the S&P/ASX 200 index after it agreed to buy Tox Free Solutions for $3.425 per share. Cleanaway will fund the acquisition via a $590 million 1 for 3.65 non-renounceable entitlement offer and a new debt facility. Retail food group, owner of businesses such as Donut King and Gloria Jeans, was the worst performing company following media reports about the business model and performance. Myer also performed poorly after issuing a profit warning saying that sales and earnings in the early part of the crucial second quarter had deteriorated. Myer cited reduced foot traffic, widespread discounting and soft consumer sentiment for an expected shortfall in first-half profit.
In global markets, Wall Street was mostly higher despite mounting concerns that the Republican tax bill may struggle to pass the Senate. The Dow Jones managed to reach a new record high as investors digested the U.S. Federal Reserve’s decision to raise the federal funds rate by 25bps to 1.25-1.50%. The Fed cited improving economic activity and a stronger labour market for their decision.
European markets were mostly lower and European bonds declined as German investor confidence fell in December for the first time in four months.
The British pound slipped as some of the promises made to clinch a breakthrough Brexit deal last week started to fray. Asian markets were mostly higher on hopes that the benefits from an upswing in global growth could offset a rise in U.S. borrowing costs.