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Current Futures: Dow +12.00, S&P +1.20, NASDAQ -0.25
European and Asian markets were pulled higher as three major banks are preparing to pay back the TARP funds, a sign that the financial sector is finding some stability.
Additionally, oil broke above the $60 benchmark, which pulled the commodity producers higher. As such, financials and raw material companies led the gains in the Asian and European trading hours. In Europe, the financials jumped more than 4% from the first few minutes of trading.
Overnight markets strengthened on news that three Wall Street banks are preparing to repay the TARP funds. If the Treasury approves such a move, TheLFB-Forex.com Trade Team notes that this will be a huge step forward, since it will further strengthen the bank’s positions. The three banks are said to be Goldman, JP Morgan and Morgan Stanley, which would have to repay up to $45 billion.
In other news, two of the biggest players in global trade, China and Brazil are planning to use their own local currencies for exports and imports between them. The move is meant to further erode the dollar’s strength, which is currently used as the standard currency in foreign transactions. By doing so, the Chinese are following their guideline to move away from the greenback, after they said a number of times that the world must find other reserve currencies. Currently, the total trade balance between Brazil and China is a few billion dollars.
TheLFB-Forex.com Trade Team said that, to some extent, China is trying to impose the Yuan as a global currency. In the past, the People's Bank of China offered Yuan denominated loans to a number of foreign central banks, including Pakistan. Additionally, China is one of the countries that lobbies for the use of IMF’s special drawings rights (SPRs) instead of the dollar as a reserve currency.
Overnight, the Japanese Nikkei rose 251.60 points (2.78%) to 9,290.29. The Australian S&P/Asx gained 81.70 points (2.19%) to 3,817.30. The U.K. Ftse gained 30.94 points (0.70%) to 4,477.39, while the German Dax added 46.31 points (0.95%) to 4,898.27
Crude oil for June delivery was recently trading at $60.30 per barrel, higher by $1.35.
Gold for June delivery was recently trading higher by $1.40 to $923.40.
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