Current Futures: Dow +56.00, S&P +6.10, NASDAQ +9.75

Overnight equity markets headed higher as the Japanese leading party announced a new stimulus bill. Asian and European markets rose for the first time in the last few days, while U.S. futures extended gains.

Financial stocks rose during the overnight session as ING plans to sell a part of its assets in order to raise additional capital. Moreover, the sentiment surrounding the financials is positive once again, as it seems all the major U.S. banks have passed the stress test. “Most likely, if the first banks to report quarterly earnings beat the analysts’ estimates, the financial sector should see a very strong rally” Trade Team said. Barclays gained over 6% this morning after it announced a possible deal with CVC to sell its iShare business. 

Not every stock rallied today in Europe. Henkel, one of the largest European manufacturers of chemical goods plunged 7%, after it announced that first quarter operating profits dropped by 33%.  

Later this morning, the Bank of England is expected to maintain the key interest rate at 0.50%, the lowest level in the bank’s 3-century history. However, ahead of the interest rate announcement, a simple overview of the past actions raises some question marks.

At the past meetings, the BoE decided to buy high-grade corporate bonds to make it easier for companies to repay their debt. However, the bank’s action also had a reverse effect, companies that had lower-ratings saw yields rise very fast. Since the BoE announced its intention to intervene in the corporate market, yields on high-grade corporate bonds have fallen, on average, by 15 basis points, while lower-grade corporate bonds rose 50 basis points over the same period. “In other words, the BoE is sending companies with a lower debt rating near or close to bankruptcy” Trade Team said. 

Overnight, the Nikkei rose 321.05 points (3.74%) to 8,916.06. The Australian S&P/Asx gained 52.60 points (1.44%) to 3,671.60. The U.K. Ftse advanced 21.81 points (0.56%) to 3,947.33, while the German Dax added 33.94 points (0.78%) to 4,391.86

Crude oil advanced $1.40 to $50.80 helped by the positive overnight equity markets.

Gold traded without a clear direction over the last few sessions. Bullion for immediate delivery fell $2.80 to $883.10