The week ahead | Calamatta Cuschieri

Stocks rallied as tech shares gained 2.2 percent. However, the S&P 500 technology sector ended the month four percent lower following a slew of negative news for some of the key companies in the space.

Walmart is reportedly eyeing a deal with Humana at a time when another retail giant, Amazon, is making strides in health care
Walmart is reportedly eyeing a deal with Humana at a time when another retail giant, Amazon, is making strides in health care

U.S. stocks rallied on Thursday, the last trading day of the month and the quarter, as the technology sector curbed steep declines seen in recent sessions.

The Dow Jones industrial average rose 254.69 points to close at 24,103.11, with Intel rising 5 percent. The S&P 500 gained 1.4 percent, with tech rising 2.2 percent. The Nasdaq composite advanced 1.6 percent.

Transports also climbed 2 percent, but were still deep in correction territory.

Shares of Facebook rose 4.4 percent, while Apple, Netflix and Alphabet also closed higher. Microsoft rose up to 2 percent after the company announced a major reorganization.

However, the S&P 500 technology sector ended the month 4 percent lower following a slew of negative news for some of the key companies in the space.

In the week ahead, on Monday are due the U.S. manufacturing PMI and ISM manufacturing data. On Tuesday, Reserve Bank of Australia will release the monetary policy decision and New York Fed debuts the Secured Overnight Financing Rate.

U.S. employment data is due on Friday. Probably the jobless rate fell in March after holding at 4.1 percent for five straight months.

Walmart-Human in talks for a new deal.

Walmart, the giant retailer, is constantly looking for ways to expand its business. Now, the nation's largest retailer may be looking to play a bigger role in the sector by acquiring Medicare insurance giant Humana — just as its rival Amazon is increasingly making its own moves in the health care market.  For Walmart, a deal to buy Humana would not come cheap: The health insurer had a market valuation of $37 billion, as of Thursday's close. 

"Humana is potentially an attractive asset for Walmart as it would help diversify its revenue stream," as analysts said.

Some analysts say a Walmart-Humana combination has the potential to be even more transformative. Humana already has its own pharmacy benefits unit, and has launched nearly 200 standalone clinics to help manage chronic conditions for its Medicare members.

Walmart has pharmacies in most of its 4700 stores and Sam Club brands, and in-store clinics in Georgia, South Carolina and Texas. An expanded partnership or merger with Humana catering to Medicare patients could help the retailer become a major provider of primary care.

Walmart may very well want to reinforce its partnership now, partly in response to retail pharmacy giant CVS Health's $69 billion deal to acquire insurer Aetna. Additionally, there is a threat of online retailer Amazon's potential entry into the pharmacy business.

The key for all of these deals is whether they can provide consumers with a more affordable and effective new health care model.

Walmart has also tried to promote its in-store clinics as a lower cost point of primary care for its workers. As the nation's single largest employer, with more than 1.5 million workers, acquiring an insurer could ostensibly help Walmart bring down health costs for its own workforce.

As analysts noted, health care firms are clearly searching for a model that will provide more value and better care for consumers.

Alibaba to buy remaining shares in food delivery app Ele.me

Chinese e-commerce giant Alibaba Group said on Sunday it would buy all shares that it does not already own in food delivery platform Ele.me.

The deal implies an enterprise value of $9.5 billion for Ele.me, Alibaba said in a statement. Ele.me is a part of a fast-growing market in China being driven by consumers eager to make purchases on their smartphones, from groceries to cinema tickets. Ele.me will continue to operate under its own brand following the acquisition.

As part of the deal Alibaba will install Alibaba Vice President Wang Lei as chief executive at Ele.me, while the current chief executive and founder of Ele.me will become chairman and serve as a special advisor to Alibaba on new retail strategies.

Currently, Alibaba and its affiliate Ant Small and Micro Financial Services Group own about 43 percent of the outstanding voting shares of Ele.me. Alibaba continues an expansion in e-commerce as it faces greater competition across Asia. Last month, the company said it would invest another $2 billion in Lazada Group SA to bolster its presence in Southeast Asia, where Amazon.com Inc. has launched in Singapore and Sea Ltd.’s Shopee is expanding to win consumers.

 

This article was issued by Linda De Luca, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.

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