Market update: The real deal: S&P 500 continues winning streak on M&A newsflow

Wall Street was in fine form yesterday, with the S&P 500 continuing its longest winning streak in two years (S&P 500 +0.7%; Dow Jones +0.4%), boosted by optimism over deal-making. Office Depot is said to be in advanced talks to merge with OfficeMax, with these rumours coming hot on the heels of both Berkshire Hathaway’s planned acquisition of H.J. Heinz and a revised takeover offer from Anheuser-Busch InBev for Mexico’s Grupo Modelo. Year-to-date in excess of US$158bn in deals have been announced – more than double the activity in the same period last year (source: Thomson Reuters Deals Intelligence). Sentiment yesterday was also helped along by news that German economic sentiment as measured by the ZEW Institute’s Index, climbed to 48.2 in February, far exceeding forecasts of a reading of 35. Investors took some slightly disappointing news on US property in their stride: the National Association of Home Builders/Wells Fargo Housing Market index slipped to 46 in February from 47 previously, owing to higher material costs.

Following some significant gains yesterday, European markets are treading water this morning (FTSE Eurofirst 300 +0.05%; FTSE 100 -0.03%) ahead of some key macro releases. The Federal Reserve and Bank of England will be releasing minutes from their last respective meetings. UK unemployment data is also due out today, as well as housing starts, building permits, and inflation figures in the US.