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Current Futures: Dow +1.00, S&P +0.80, NASDAQ +3.00
European markets opened higher as positive news emerge from the financial sector, but during the overnight session, S&P futures struggled to break above 941.00 resistance, an area that is going to be tough to move through on the current light volume levels.
Over the last few weeks of trading, the global markets have lacked the essential “green shots” reports, something that coincided with the major equity markets entering a sideways trading range, TheLFB-Forex.com Trade Team notes. However, on Tuesday morning, investors received a new “green shot” from the U.S. Treasury, saying that it would allow 10 banks to repay the TARP funds.
This is very positive news for the whole economy and especially for the financial sector, the XLF, since it shows that the government sees the banking industry as safe and capable enough of withstanding any future shocks, on its own. Moreover, some investors feared that the government might be tempted to abuse its positions as one of the main shareholders in the financial sector, fears that are now fading. The TARP funds were given out eight months ago, at a time when Wall Street banks were bankrupting on daily basis (read Lehman, Bear Stearns, Freddie Mac, Fannie Mae and co.). As a note, the Swiss bank UBS also plans to pay back its loan taken from the government.
In Europe, electronic-makers jumped 3% after Texas Instruments, one of the largest makers of micro chips increased its earnings forecasts for the second quarter. In the U.K. FTSE market, the banking sector leads the gains, after being the worst performer on Monday. The German Dax advanced, with carmakers moving forward, as it seems that Porsche will sell a 25% stake to the Qatar Investment Authority, avoiding a financial catastrophe.
Overnight, the Japanese Nikkei fell 78.81 points (0.80%) to 9,786.82. The Australian S&P/Asx declined 36.30 points (0.91%) to 3,934.90. The U.K. Ftse gained 25.27 points (0.57%) to 4,430.49, while the German Dax added 37.24 points (0.74%) to 5,041.96.
Crude oil for July delivery was recently trading at $68.95 per barrel, higher by $0.85.
Gold for July delivery was recently trading higher by $2.90 to $955.40.
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