AbbVie puckers up for Botox-maker

Allergan shareholders will receive 0.8660 AbbVie shares and $120.30 in cash for each AGN share, making the deal worth $188.24/per AGN share. The combined companies are projected to generate $19.0 billion in operating cash flow with expected annual synergies and cost savings of $2.0 billion in year three. Closing is planned for early 2020, subject to regulatory and AGN shareholder approvals. AGN jumped 30%, and ABBV lost 10.17% at the New York open.

The news wasn’t enough for Wall Street to extend the June rally. The three major indices were modestly lower as of 14:00 GMT but are still up over 4.0% for the month. Mixed US data, which included a slightly softer Case-Shiller Home Price Index. (Actual 2.5% vs forecast 2.6%) was ignored.

Traders that believe the stock market rally was because of the Fed’s dovish shift and the prospect of two rate cuts before the end of the year, would be wrong. President Trump tweeted the real reason for the gains: “Stock Market is heading for one of the best months (June) in the history of our Country. Thank you Mr. President!”

USDCAD drifted lower, probing support in the 1.3130-50 zone. Prices are under pressure due to the surge in crude oil prices and from broad US dollar weakness. A surprising jump in Canadian Wholesale Sales in April (actual 1.7% m/m vs forecast 0.2%) added to the negative sentiment. 

FX markets remain cautious do the ongoing US/Iran tensions and ahead of news from the next round of China/US trade talks. Fed Chair Powell is speaking at lunchtime in New York but isn’t expected to deviate from his post-FOMC press conference remarks.