Global weekly - ECB meeting: the aftermath

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ABN AMRO Private Banking, Expertise, Wealth Structuring, Corporate tax planning,

Equity markets retreated this week, as investors were still digesting the ECB’s recent decision not to increase the size of its monthly asset purchases and to only moderately lower the deposit rate. Bond markets initially fell in response to the ECB’s statement, before recovering a bit this week.

Equity markets update

Equity markets headed lower this week, mainly driven by the slump in commodity prices and the aftermath of the ECB statement. By raising oil production from 30 million to 31.5 million barrels per day, the Organisation of Petroleum Exporting Countries (OPEC) increased the pressure on US exploration & production companies. As a result, stock prices of Anadarko Petroleum and Marathon Oil declined by double digits. On
Tuesday, pipeline and energy storage company Kinder Morgan announced a dividend cut of 75%, to avoid a downgrade by credit rating agencies from investment-grade to junk status. Following this news, we decided to remove Kinder Morgan from our recommended list.

This week, we saw confirmation that our investment theme ‘Unlocking shareholder value’ is indeed a current topic. Dow Chemical and DuPont are planning to merge, according to the Wall Street Journal. The two companies would have a combined value of USD 120 billion. After completion of the merger, the newly formed company would be split into three parts: agrochemicals & seeds, plastics and specialty chemicals. Internet and media company Yahoo!, in turn, announced a reverse spin-off where its internet and media activities will be transferred to a newly formed entity, while its stake in Alibaba remains with the current company.

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