US energy fades despite European M&A

A $70bn mega deal in the European oil and gas sector failed to add sizzle to US energy stocks on Wednesday.

Energy companies were in broad retreat as oil prices tumbled after US crude inventories posted their biggest weekly jump in 14 years and Saudi Arabia announced that production had reached a record high in March.

ExxonMobil, the world's biggest publicly listed oil company, fell 1.2 per cent to $84.75 even as analysts speculated that Royal Dutch Shell's £47bn bid for rival BG Group could herald a wave of activity in the sector.

Exxon, with its deep pockets, is seen to be in pole position to lead the charge, and chief executive Rex Tillerson said last month it could be open to a big deal.

Chevron, another large US oil producer, fell 1.3 per cent to $107.12 while the S&P 500 energy index fell 0.6 per cent, making it the day's second worst performing sector after telecoms.

The gloom failed to drag down the wider market, however. The S&P 500 rose 0.3 per cent to 2,082.07, led by gains in Perrigo. The pharmaceutical supplier surged nearly 30 per cent to $214 after US drugmaker Mylan offered to acquire it for $205 a share, valuing the business at just under $29bn. Mylan shares jumped 10 per cent to $65.49.

Netflix rose 3.4 per cent to $437.76 after analysts at Goldman Sachs revised their outlook for the stock and upped their target price by $50 to $510.

"We raise our 12-month price target . . . based on . . . a faster growth trajectory post heavy international expansion in 2015," said the investment bank. Elsewhere, rising pharmacy sales helped perk up Rite Aid. Shares in the US chain, which sells medications along with other food and household items, rose 3 per cent to $8.95 after it said that it expected same-store sales in the current year to climb between 2.5 and 4.5 per cent from a year earlier, eclipsing Wall Street forecasts of a 2.5 per cent gain. The Pennsylvania-based company attributed the rise to prescription benefits utilised by US consumers.

Dollar Tree advanced 2.8 per cent to $82.85 after the US discount chain said that the Federal Trade Commission had substantially completed its review of its planned acquisition of rival Family Dollar.

Shares of Lions Gate Entertainment, the company behind hit films such as the Hunger Games series, fell more than 6 per cent to $31.51 after its largest shareholder, MHR Fund Management, sold 10m shares.

Lululemon Athletica received a boost from analysts at Sterne Agee.

The stock gained more than 3 per cent to $68.55 after the stock brokerage firm upgraded the athletic clothing company to "buy" from "neutral" and nearly doubled its price target to $77 from $39.

nalysts said that new chief financial officer, Stuart Haselden, "has a strong grasp of fundamentals of vertical retailing due to his experience at J Crew" and that the company's investments should pay off sooner than expected.

The Dow Jones Industrial Average was up 0.2 per cent to 17,908.35. The Nasdaq Composite gained 0.8 per cent to 4,947.22.

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