Chesapeake Energy and Southwestern Energy agreed to merge in an all-stock transaction valued at $7.4 billion that would create the largest natural-gas producer in the U.S. The deal is in large part a bet that booming liquefied-natural-gas exports from the shores of Texas and Louisiana will allow drillers to sell more of their product to Europe, Asia and other global markets craving American fuel. It also continues a wave of consolidation that has swept across the U.S. energy industry in recent months. With a market capitalization of more than $17 billion, the combined company would be endowed with a huge position in one of the U.S.’s largest gas basins in the Northeast, as well as in a big gas-producing region near the Gulf Coast. Huge terminals there have helped make the U.S. the world’s top LNG exporter. The deal, at $6.69 a share, values Southwestern at a 2.9% discount to its closing market value of about $7.6 billion on Wednesday. Last week, The Wall Street Journal reported that Southwestern and Chesapeake were close to a merger. The deal represents about a 4.5% premium to Southwestern’s share price on the day of the Journal article. “This powerful combination redefines the natural gas producer, forming the first U.S. based independent that can truly compete on an international scale,” Chesapeake Chief Executive Nick Dell’Osso said.

he Swiss market ended weak on Thursday, in line with most of the markets in Europe, after data showing a bigger than expected increase in U.S. consumer price inflation tempered expectations of an early rate cut. The benchmark SMI, which slipped into the red around late morning, kept edging lower as the session progressed to eventually close with a loss of 101.38 points or 0.9% at 11,153.62. UBS Group, Richemont, Nestle, Sika, Partners Group and Roche Holding ended down 1.3 to 1.73%. Geberit and Alcon both shed a little over 1%. Swiss Life Holding, Zurich Insurance Group and Givaudan drifted down 0.85%, 0.71% and 0.62%, respectively. Lonza Group gained 1.37%, and Kuehne & Nagel advanced 1.3%. Sonova climbed 0.72%, while Swiss Re ended modestly higher. In the Mid Price Index, Barry Callebaut declined 3.3%. Meyer Burger Tech, Clariant, Ems Chemie Holding, ams OSRAM AG, Sandoz and Swiss Prime Site lost 1 to 2.1%. VAT Group shares climbed more than 1% in early trades after reporting stronger than expected orders in Q4. However, the stock pared its gains as the day progressed and finally settled with a marginal loss.

Europe
European stocks closed notably lower on Thursday on concerns the Federal Reserve will likely hold interest rates higher for longer after data from the Labor Department showed an acceleration in U.S. consumer price growth in the month of December. The pan European Stoxx 600 ended down 0.77%. The U.K.'s FTSE 100 dropped 0.98%, Germany's DAX ended down 0.86%, and France's CAC 40 slid 0.52%, while Switzerland's SMI closed lower by 0.9%. Among other markets in Europe, Austria, Belgium, Denmark, Finland, Norway, Poland, Portugal, Spain and Sweden ended weak. Greece, Russia and Turkiye closed higher, while Iceland and Netherlands ended flat. In the UK market, Barclays ended nearly 5% down. WPP, Rolls-Royce Holdings, Lloyds Banking, Ocado Group, Taylor Wimpey and Associated British Foods lost 3 to 4%. Marks & Spencer ended more than 3% down. The British retailer reported strong holiday sales growth but warned of an uncertain outlook for this year. Informa ended notaby lower despite reporting a robust performance in a trading update for 2023. Barratt Developments, Endeavour Mining, HSBC Holdings, M&G, Vodafone, Standard Chartered and Croda International also declined sharply. Whitbread climbed about 2.3%, and Rentokil Initial gained 1.5%. BAE Systems, Anglo American Plc, and Diageo also closed notably higher. In the German market, Deutsche Bank lost about 4.8%.

United States
Stocks staged an afternoon rally to erase most of their earlier declines Thursday after new data suggested inflation might not be cooling quite as quickly as some investors hoped. The S&P 500 fell roughly 0.1%, after ending Wednesday just 0.3% below its record closing high set just over two years ago. The Dow Jones Industrial Average ticked up around 15 points, or less than 0.1%, while the Nasdaq Composite was essentially flat. All three indexes were still on track to post weekly gains after dropping in the first week of the year. On Friday, investors will get another reading on inflation when the producer-price index is released. Data on both consumer and producer prices feed into the Fed’s preferred inflation gauge, the personal-consumption expenditures index. The PCE index is released toward the end of every month and has recently shown inflation to be lower than the consumer-price index. Stock declines were broad-based Thursday. Energy was among the best-performing sectors in the S&P 500, rising 0.2%. U.S. crude climbed 0.9% to $72.02 a barrel. Among individual stocks, Microsoft shares rose 0.5%. The company briefly surpassed Apple as the most valuable U.S. company during intraday trading. But Apple narrowly held onto the title, closing down 0.3%. The first exchange-traded funds in the U.S. holding spot bitcoin also started trading Thursday after getting the greenlight from the Securities and Exchange Commission. BlackRock’s bitcoin ETF finished at $26.63 a share, down 4.7% from its opening price.

Asia
The Japanese stock market is also in rally mode on Friday. For the fourth day in a row, the Nikkei index rose significantly, this time by 1.4 per cent to 35,538 points and marked a 34-year high in the course of trading. Over the week as a whole, the gain is already over 6 per cent. The trend on the Chinese stock markets is stable, supported by better-than-expected export and import data. The eagerly awaited Chinese inflation data for December came in close to forecasts and did not provide any impetus.

Bonds
The yield on the benchmark 10-year U.S. Treasury note fell to 3.974%, according to Tradeweb, from 4.029% Wednesday.

Analysis
Bank of America lowers Lufthansa to Underperform (Neutral)/EUR 7.60
Deutsche Bank raises the Rio Tinto target to 6,200 (6,000) GBp – Buy
JP Morgan lowers the Saint-Gobain target to EUR 75 (76) – Overweight

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