Current Futures: Dow -14.00, S&P -3.20, NASDAQ -3.25
U.S. futures trade slightly below the break-even line, but the European equity markets advanced this morning, as the stress test results have been leaked one day early showing that a number of banks must raise additional capital.
The results of the stress-test results appear to have been leaked one day earlier than the official date. According to the latest rumors, Bank of America will require $34 billion, the largest need of capital among the 19 tested banks. At the same time, Citigroup may require only a small amount of funds, since it plans to convert the government’s preferred shares to common shares. TheLFB-Forex.com Trade Team notes that this way, the bank would increase its tangible common equity ratio, the Treasury’s preferred way to gauge the bank’s ability to take on unexpected losses.
Moreover, both Citibank and Bank of America plan to raise additional cash by selling their foreign investments. Bank of America plans to scrap its investment in China Construction Bank Corp., while Citibank plans to raise $2.5 billion by selling the Japanese broker Nikko Cordial Securities.
The same unofficial sources have declared that, the banks that want to repay the TARP loans must show first that they are able to raise cash without any government guarantees. Over the last few months, only a handful of banks were able to do that TheLFB-Forex.com Trade Team notes. Among them, Goldman Sachs and Bank of New York Mellon and both banks expressed their willingness to pay back the loan.
Overnight, the Japanese Nikkei was closed for a third consecutive day. The Australian S&P/Asx fell 23.30 points (0.60%) to 3,867.10. The U.K. Ftse rose 25.16 points (0.58%) to 4,362.10, while the German Dax added 20.66 points (0.43%) to 4,873.69
Crude oil for May delivery was recently trading at $54.05 per barrel, up $0.20.
Gold for May delivery was recently trading lower by $1.00 to $903.30.