Ellisons’ Paramount circling Warners; Wall St rallies as Fed cut bets firm

Warner Bros Discovery surged 27% amid reports the Ellison family’s Paramount Skydance is considering mounting a bid for the cable network and movie studio ahead of a planned carving up of the business.

The media firms led US stock markets higher, with Wall Street rallying after consumer inflation and new jobless claims data firmed up expectations for the Federal Reserve to cut its key rate at next week’s policy meeting.

Across the Atlantic, the European Central Bank kept its benchmark rate unchanged, while stock markets were led higher by defence names such as BAE Systems, Rheinmetall and Rolls-Royce as Russia’s encroaching into Polish territory remains on investors’ minds.

And meme stock Opendoor Technologies continued its stellar September quarter, surging 79% after hiring a former Shopify exec as its new chief executive.

Making movies

Warner Bros Discovery led gainers on the S&P 500 as it jumped 27% after the Wall Street Journal reported the Ellison family’s Paramount Skydance is considering making a majority cash bid for the cable network operator and heavyweight movie studio.

Paramount climbed 11% on the report, in what would be a big mouthful with the Ellisons recently buying the firm for US$8.4 billion, while Warner Bros’ market capitalisation has advanced to US$31.05 billion ahead of a planned spinning out of the legacy cable business.

In saying that, Larry Ellison reclaimed the mantle of the world’s richest person yesterday after his Oracle cloud computing company surged on heady optimism about its ability to snare a growing share of artificial intelligence business. Oracle gave up some of those gains, falling 5.9% in late trading.

Meanwhile, meme stock Opendoor Technologies soared 79% after hiring former Shopgy chief operating officer Kaz Nejatian as its new chief executive and two co-founders returned to its board, continuing the surge this year which has seen the Wall Street Bets favourite’s gain so far this quarter to 1,865%.

Stocks on Wall Street were broadly stronger with the Dow Jones Industrial Average climbing 1.3% in late trading, while the S&P 500 was up 0.8% and the tech-heavy Nasdaq Composite 0.7%.

Losing interest

US consumer inflation rose at an annual pace of 2.9% in August, meeting expectations, while initial jobless claims climbed to a four-year high 263,000, both of which firmed up bets on a rate cut from the Federal Reserve at next week’s policy review.

“The combination of a not-too-hot CPI and jump in jobless claims drove down US rates, with the market taking the view that the weaker labour market data is a better guide to the policy outlook than the temporary lift in inflation,” Bank of New Zealand senior market strategist Jason Wong said in a note.

The kiwi dollar rose to 59.74 US cents at 7am in Auckland from 59.37 cents yesterday.

Across the Atlantic, the European Central Bank kept its key deposit rate at 2% as expected, saying risks to growth are more balanced and the inflation outlook more neutral. The kiwi dollar traded at 50.91 euro cents from 50.76 cents yesterday.

European stock markets were broadly stronger with the UK’s FTSE 100 up 0.8%, Germany’s DAX 30 gaining 0.3% and France’s CAC 40 increasing 0.8% with defence stocks leading gains after Poland shot down Russian drones that encroached on its territory during an attack in western Ukraine. BAE Systems, Rheinmetall and Rolls-Royce all advanced.

That rally is poised to extend into the antipodes, with Australian futures pointing to a 0.5% gains for the S&P/ASX 200 index when trading opens across the Tasman.

Local data include the BNZ-Business NZ performance of manufacturing index and Statistics New Zealand’s August credit and debit card spending.

And New Zealand’s S&P/NZX 50 index will have a pause in companies shedding dividend rights.

Reporting by Paul McBeth. Image from Silas Lundquist on Unsplash.