The potential merger and acquisition symbols selected by Citibank have recently continued to surge, highlighting that as tariff concerns ease, Wall Street has revived its optimistic sentiment that merger Trades will recover with the economic recovery.
According to Zhitong Finance APP, the potential merger and acquisition symbols selected by Citibank have recently surged, highlighting the optimistic sentiment on Wall Street that merger and acquisition deals will warm up with the economic recovery as tariff concerns ease.
Since April 8th (the day before President Trump announced the suspension of tariffs on several countries), the basket of U.S. merger targets from this bank has soared by 44%. This is the fastest recorded increase in such a short time since the index (tracking 40 selected stocks by the bank's equity trading strategy department) began to be priced in 2022. This also marks a notable reversal after the index significantly dropped from late January to early April due to tariff concerns.
This rebound is more than twice the S&P 500 Index during the same period, indicating that market risk appetite is returning to highly speculative areas. This is part of the optimistic sentiment that swept the market last week, as markets bet on a recovery of the U.S. economy, and the S&P 500 Index surpasses its historical peak set in February.
Stuart Kaiser from Citibank commented on the recent increase in the merger stock basket, stating, "This largely reflects the institutions' risk tolerance." The merger targets Index contains 40 volatile stocks with merger potential, such as Reddit (RDDT.US) and Cloudflare (NET.US), which have not yet announced any deals.
In fact, signs of a return to trading were evident last week, marking the first significant deals announced since April 2nd, when Trump announced high tariffs on global trade partners. For example, Dick's Sporting Goods (DKS.US) reached a deal to acquire Foot Locker (FL.US) for $2.4 billion, and Charter Communications (CHTR.US) also agreed to merge with Cox Communications.
For market observers who have been looking forward to Trump's pro-business commitments to boost more Trades since the beginning of the year, this is undoubtedly a positive signal. Previously, they had witnessed how Trump's tariff policies put pressure on the stock market and suppressed the liquidity of large Trades. Citigroup's Kaiser currently expects that this merger Stocks basket, which is adjusted roughly once per quarter, will reach or exceed its annual high set in January.
This Stocks basket utilizes Citigroup's quantitative research's fundamental screening methods and combines them with the Options pricing Indicators corresponding to the relevant company names. Capri Holdings (CPRI.US) and Tapestry (TPR.US) are companies that have been involved in acquisition Trades within this basket. In this specific case, their merger was blocked by the Federal Trade Commission at the end of 2024.
Looking forward to the future.
Of course, trade friction is likely to reemerge, and consumer sentiment is also declining due to concerns that tariffs will exacerbate inflation. These factors may disrupt Wall Street's risk appetite and hinder companies from engaging in Trades.
Moreover, there is no guarantee that potential acquisition negotiations will lead to an agreement, and announced acquisitions do not always get completed. Market volatility only adds greater resistance for dealmakers. This happened in early April when, due to the trade war, acquisitions and initial public offerings worth billions of dollars were put on hold.
However, for now, market observers like Adam Crisafulli from Vital Knowledge believe that recent deal announcements are signals that more Trades are on the way.
He stated, "As trade uncertainty decreases, American companies are becoming more confident in their decision-making regarding Global Strategy adjustments."
