Takeover announcement renews interest in Canadian oil sands.
Equity markets in the U.S. have been trading essentially flat this morning, while Canadian markets continue to build on Friday’s late upward momentum. Friday’s trading may have marked a major turning point for equity markets sentiment. During the afternoon, markets attempted to sell off, but after testing or slightly dipping through key former resistance levels such as 12,800 for the Dow Industrials (US30 CFD) and 1,875 for the NASDAQ 100 (NDAQ100 CFD), markets quickly rebounded. Not only did this indicate that old resistance levels may have become new support levels, but that investors had enough confidence to drive markets back up heading into a weekend, which suggests that investors may be regaining confidence.
With limited economic or earnings news today, markets appear to be getting a boost from a number of significant takeover announcements this morning. Increased activity on this front not only suggests that some companies may be seeing value in the market, but also that the ability of corporations to raise the capital necessary to consummate such deals may also be improving, another sign that the worst of the financial liquidity crisis may be behind us.
In commodity action today, crude oil rallied through the $119/bbl level earlier this morning and then backed off a bit, while natural gas broke through the $11.00/mcf level. Crude oil appears to be advancing due to concerns over how long supply disruptions due to strikes in the North Sea or Nigeria may last. Natural gas, meanwhile, appears to be building off of last week’s better-than-expected inventory numbers through shoulder season.
Although precious metals such as gold and silver have attempted to rebound this morning, they have not been able to break through resistance levels at $900/oz or $17.00/oz respectively. This suggests that some of the speculative capital that ran gold through $1,000/oz and silver through $21.00/oz earlier this year may have moved on to other areas, and that some of the panic sentiment that had driven a possible flight to safety in precious metals may have passed. Based on this, it is possible that if some of the concerns supporting energy prices become alleviated, energy commodities could be vulnerable to a correction.
Canadian share update: new interest in oil sands
A significant takeover announcement this morning regarding Synenco (TSX: T.SYN, Bullboard) appears to have renewed interest in the oil sands sector this morning. In early trading, Synenco has jumped 16.1%, Canadian Oil Sands (TSX: T.COS, Bullboard) has advanced 2.3%, UTS Energy (TSX: T.UTS, Bullboard) has climbed 1.6%, and Petro-Canada (TSX: T.PCA, Bullboard) has moved up 1.8%.
Total has agreed to purchase Synenco for $9.00 per share, a 22% premium to Friday’s close. Recall that Synenco and its oil sands assets have been on the block for some time and the company had already reduced staff and activity in anticipation of a sale.
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