Three numbers to start your day:
AMC Theatres Rallies 14%
It wasn’t the only cinema stock that gained—U.S. chain Cinemark’s stock rose 6.6%. The reason can be found across the Atlantic.
Cineworld U.K., which operates Regal cinemas in the U.S., was able to secure $750 million in financing to help it survive until the pandemic is fully over.
A surge in coronavirus cases across the U.S. and Europe has prompted governments to again shut down some establishments and limit gathering sizes. So the $750 million cash infusion comes at a key time for Cineworld–and could signal that investors are willing to finance the broader industry.
Cineworld’s stock, which is listed in the U.K, rallied 22% on Monday.
Gap Shares Rise 6.9%
The retailer has been another unlikely winner during the recent resurgence in coronavirus cases.
Gap is scheduled to report its quarterly results after the closing bell today, and analysts expect a sales decline of more than 2% and a 37% drop in earnings compared with the quarter a year ago.
So why the rally? Well, an analyst at J.P. Morgan has become bullish on the stock, upgrading it to Overweight–the equivalent of a buy recommendation–from Neutral.
The analyst said that the company’s sales may be flat compared with last year, and highlighted demand at the retailer’s Old Navy brand. Those trends, and a much-anticipated partnership with Kanye West, mean that things could start looking brighter for Gap in the new year.
There Has Been $205 Billion in Deal Activity Over the Past Month
That is according to Citigroup.
In other words, mergers and acquisitions are back. In March, deal volume was only about $20 billion — one-tenth of the level from the past month.
The M&A revival could give a boost to the stock market even as companies buy fewer of their own shares. Corporate stock buybacks are down compared with last year, according to J.P. Morgan. All else equal, that would remove one important pillar of support for stocks–but the deal-making may offset that decline.
For the rest of this year, Citigroup says that deal activity could pick up among oil-and-gas producers, biotech companies, and semiconductor makers.
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