Futures Rise on Cyprus Deal
U.S. equity futures rose in early pre-market trade as Cyprus and
the Troika of creditors reached an agreement to bail out the nation
with $13 billion in exchange for drastically reducing the size of
its banking sector and freezing deposits greater than 100 thousand
euros. The plan does protect smaller deposits, most of which are
held by Cypriot citizens and not by foreigners seeking a tax
In other news around the markets:
Moody's reiterated its negative view on French banks overnight by
releasing a note in which it reiterated that French banks remained
on negative watch. However, the agency did not downgrade any banks
in its latest revisions. Moody's also commented on the Cyprus
bailout, saying that the bailout does not remove the risk of Cyprus
exiting the euro from the table and is credit negative for all EU
sovereigns. Japanese Prime Minister Shinzo Abe is set to meet with
European leaders this week, both to discuss the terms of the Cyprus
bailout but also in order to hash out a long-term trade deal with
the EU. S&P 500 futures rose 5.8 points to 1,558.50. The
EUR/USD was higher at 1.3013 but was well off of the session highs.
Spanish 10-year government bond yields fell to 4.8 percent from
4.85 percent. Italian 10-year government bond yields fell to 4.45
percent from 4.53 percent. Gold fell 0.11 percent to $1,606.20 per
Asian shares were mixed overnight despite the euphoria over the
Cyprus bailout as Japanese shares popped and Chinese shares lagged.
The Japanese Nikkei Index rose 1.69 percent and the Shanghai
Composite Index fell 0.07 percent while the Hang Seng Index rose
0.61 percent. Also, the Korean Kospi rose 1.49 percent and
Australian shares rose 0.46 percent.
European shares were sharply higher in early trade following the
Cyprus bailout as leaders averted another crisis. The Spanish Ibex
Index rose 1.18 percent and the Italian FTSE MIB Index rose 0.76
percent. Meanwhile, the German DAX gained 1.49 percent and the
French CAC added 1.66 percent while U.K. shares rose 0.72
Commodities were mixed overnight as energy futures rose and
metals futures declined. WTI Crude futures rose 0.38 percent to
$94.07 per barrel and Brent Crude futures rose 0.47 percent to
$108.17 per barrel. Copper futures declined 0.17 percent on Chinese
weakness to $346.00 per pound. Gold was lower and silver futures
rose 0.18 percent to $28.75 per ounce.
Currency markets were in flux overnight as the euro gained and
the yen weakened in a clear risk-off manner overnight following the
bailout deal in Cyprus. The EUR/USD was higher at 1.3013 and the
dollar rose against the yen to 94.79. Overall, the Dollar Index
fell 0.09 percent on weakness against the euro, the Canadian
dollar, and the Swiss franc.
Stocks moving in the pre-market included:
) shares rose 2.28 percent pre-market after the company announced a
press conference in which it is rumored to announce new phones
running Microsoft's (NASDAQ:
) Windows Mobile operating system. J.C. Penney (NYSE:
) shares declined 1.81 percent pre-market on fears that spinning
off company assets into a REIT would not be enough to save the
ailing retailer. Freeport-McMoRan Copper and Gold (NYSE:
) shares rose 1.33 percent pre-market after the Angolan government
announced it was to reopen a railway between Congo and Zambia which
would decrease the costs of shipping mined copper. Bank of America
) shares rose 0.72 percent pre-market as financial stocks globally
rallied on the Cyprus bailout.
Notable companies expected to report earnings Monday
Apollo Group (NASDAQ:
) is expected to report fourth quarter EPS of $0.18 vs. $0.58 a
year ago. Dollar General (NYSE:
) is expected to report fourth quarter EPS of $0.90 vs. $0.87 a
year ago. JA Solar (NASDAQ:
) is expected to report a fourth quarter loss of $1.53 per share
vs. a loss of $0.55 per share a year ago.
On the economics calendar Monday, the Chicago Fed National
Activity Index and the Dallas Fed Manufacturing Business Index are
expected. Also, the Treasury is set to auction 4-week and 3-month
bills. In addition, New York Fed President William Dudley is set to
speak at the Economic Club of New York and Chairman Ben Bernanke is
set to speak alongside Bank of England Governor Mervyn King at the
London School of Economics on lessons learned from the crisis.
Overnight, Reserve bank of Australia Governor Glenn Stevens is set
Good luck and good trading.
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