Markets

Stocks brushing off Russian fears

Stocks are higher this morning, brushing off weakness in Asia and tensions in Eastern Europe.

S&P 500 futures are up 0.35 percent, matching gains of a similar magnitude across Europe. Shanghai fell almost 2 percent overnight and Tokyo slid 1 percent, hurt by liquidity concerns in China and poor earnings by Japanese companies.

Pro-Russian separatists caused anxiety over the weekend by seizing government buildings in eastern Ukraine, along with several Western military observers. Washington and Brussels will retaliate with increased sanctions against Moscow rather than military action. That mild response is helping to prevent the crisis from having a more dramatic effect on investor sentiment.

Attention this week will focus on a heavy flow of news from Europe and the United States, which are enjoying their strongest economic conditions in several years. Pending home sales at 10 a.m. ET is the only item this morning, but tomorrow brings the Case-Shiller index of housing prices and consumer confidence. Wednesday is packed with major events: European inflation numbers, ADP's private-sector payrolls, first-quarter gross domestic product, and the Federal Reserve's interest-rate decision. Corporate earnings remain active.

Merger activity is also picking up, especially in the pharmaceuticals industry. Furiex is up more than 30 percent this morning on a deal with Forest Laboratories that values FURX at as much as $1.46 billion. Pfizer also confirmed a recent story that it was in talks with AstraZeneca and Reuters reported that Merck wants to sell its consumer business for $14 billion. These headlines follow Valeant Pharmaceuticals's $47 bid for Allergan last Monday.

While the S&P began April with a sharp drop, it quickly rebounded and held support above its 50-day moving average on Friday. Transportation stocks made a new high last week as well, which could make some technicians believe there is less risk that a major correction is looming.

The Nasdaq 100 and Russell 2000 have been the main source of worry as investors shift money away from technology stocks such as Yahoo, Facebook, and Google that led the market higher in 2013. They've been replacing them with energy and utilities, according to our proprietary researchLAB market scanner. Health care has also returned to favor recently, helped by the drug-maker deals and value-hunting among hospital operators and HMOs.

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Currencies and commodities are painting a bullish picture this morning, with the safe-haven Japanese yen lower and the euro higher. The Canadian and Australian dollars, which tend to follow risk appetite, are up slightly against the greenback as well. Oil, copper, and agricultural products are up fractionally.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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