Stock futures made small moves lower on Monday, Sept. 25, after a less-than-certain victory for Chancellor Angela Merkel in the German elections and as North Korea remained a concerning presence hanging over Wall Street.
Dow Jones Industrial Average futures were down 0.03%, S&P 500 futures fell 0.05%, and Nasdaq futures slid 0.05%.
In international news, Chancellor Angela Merkel won a smaller-than-expected victory in Germany's federal elections and indicated a new government may not be in place until Christmas. Merkel's Christian Democrats and their sister party, the Christian Socialists, polled at around 32.7% in the national vote, comfortably ahead of the 20.2% earned by their chief rival, the Social Democrats. However, Merkel's party saw a significant slippage in its overall vote share, with a major portion of those lost votes going to far-right parties.
The Alternative for Deutschland (Afd) party was by far the biggest gainer in Sunday's federal German elections, boosting its support by more than 8.5% and earning 13.5% of the national vote. Under Germany's electoral system, that's likely to translate into around 90 seats in the Bundestag, making it the third-largest sitting political party in the parliament of Europe's biggest and most important economy.
The far-right's gains could color Merkel's attempts to form a coalition government, and possibly force her to take a more inward-looking approach to Germany's financial and political relationship with Europe as she reaches out to her FDP and Green party rivals, each of which have expressed various levels of concern with the Brussels consensus of "ever closer Union."
The war of words between the U.S. and North Korea continued over the weekend. In an appearance at the U.N. General Assembly on Saturday, North Korean Foreign Minister Ri Yong Ho said that a missile attack on the U.S. mainland had become "inevitable" after U.S. President Donald Trump issued a series of threats to destroy the country and called North Korean leader Kim Jong-un "rocket man."
In response on Saturday, Trump tweeted, "Just heard Foreign Minister of North Korea speak at U.N. If he echoes thoughts of Little Rocket Man, they won't be around much longer!"
Trump addressed the U.N. General Assembly last week and called Kim the head of a "depraved" regime, and said the U.S. is "ready, willing and able" to use military force. He promised to "destroy" the country if the U.S. is forced to act.
The authoritarian country has conducted a number of missile tests in recent weeks, with two of the devices flying over Japan, and has threatened to bomb U.S. territory Guam. The face-off has unsettled markets since it returned to headlines in early August.
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General Electric Co. (GE) - Get Report agreed to sell its industrial solutions unit to ABB Ltd. (ABB) - Get Report , the Swiss robotics and energy grid conglomerate, for $2.6 billion. ABB will pay just under one times GE Industrial Solutions sales of $2.7 billion and about 12 times the unit's earnings before interest, taxes, depreciation and amortization of $208 million.
For GE, the sale is the first big disposal by new CEO John Flannery, who has promised to cut costs and sell operations in a bid to reverse lackluster performance that has dragged GE's share price down almost 17% over the past year.
GE shares rose slightly in premarket trading on Monday.
In other deal news, Genuine Parts Co. (GPC) - Get Report agreed to purchase European peer Alliance Automotive Group for $2 billion, including debt. The deal, expected to close in the fourth quarter, should deliver $2.3 billion in gross annual billings and is expected to boost profit-per-share by 45 cents to 50 cents in fiscal 2018. Genuine Parts shares were higher in premarket trading.
D.R. Horton Inc. (DHI) - Get Report fell more than 3% in premarket trading after slashing its fourth-quarter guidance as the recent hurricanes caused delays in its pipeline. The largest U.S. homebuilder anticipates to generate roughly $150 million of cash flow from operations over its fiscal year, down from its previous guidance of $300 million. Its fourth-quarter backlog conversion rate is expected to slip to 85% from a previous target of 88% to 90%.
Allergan PLC (AGN) - Get Report moved slightly higher on Monday after authrorizing a new share buyback program and announcing that its chief financial officer, Tessa Hilado, would retire once a replacement has been found. The drugmaker approved a $2 billion stock repurchase program, around 2.9% of share outstanding at current levels. The company called its stock "substantially undervalued." Allergan also committed to paying down $3.75 billion in debt next year.
Updated from 7:51 a.m. ET, Monday, Sept. 25.
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