Current Futures: Dow +34.00, S&P +2.80, NASDAQ +6.50
European markets opened lower for a second consecutive day, following negative U.S. futures and the negative close seen in the Asian markets. However, the S&P futures have rallied strongly since then, lifting the European major indexes.
It appears as though the U.S. futures were pulled higher by Bank of America, one of the most affected banks by the credit crisis, who sold a 5.8% stake in the Chinese Construction Bank. By doing this, Bank of America managed to raise $7.3 billion in cash, which is crucial right now, as the bank needs to raise up to $33.9 billion after the stress test results.
On the U.K. Ftse, the banking sector declined more than 3%, after Credit Suisse recommended selling RBS, one of the leading U.K. banks. On the German Dax, the auto industry declined after the largest shareholder of Volkswagen said that Porsche must reduce its debt ratio before the two companies can merge. This may prove to be very expensive for Porsche, and has the potential to affect, substantially, the company’s balance sheet. The same situation played out in the Asian session, where banks together with the automakers led the pack in declines. Additionally, negative news came tonight from China, which saw its exports drop by 22.6% in April from one year earlier. To some extent, this contradicts the recent recovery hypothesis, TheLFB-Forex.com Trade Team notes.
Overnight, the Japanese Nikkei declined 153.37 points (1.62%) to 9,298.61. The Australian S&P/Asx slipped 48.80 points (1.24%) to 3,877.20. The U.K. gained 3.69 points (0.08%) to 4,439.19, while the German Dax added 35.44 points (0.73%) to 4,902.35.
Crude oil for May delivery was recently trading at $58.60 per barrel, higher by $0.10.
Gold for May delivery was recently trading higher by $0.20 to $913.50.