Current Futures: Dow -28.00, S&P -3.90, NASDAQ -2.25
U.S. Futures and European markets trade in negative territory, as the market expects the stress test results to be released to the bank’s executives later today. For now, rumors are that 10 banks out the 19 tested will require additional capital.
European markets opened lower, overall, but the U.K.’s Ftse soared 2% as the index opened for the first time this week after the market was closed on Monday for a Bank Holiday. Similar to what was seen in the Asian trading hours, commodity stocks and financials saw strong gains today. Adidas fell 8% after the company said its first quarter earnings dropped 97%
On the U.K.’s Ftse, the shares of raw materials companies rose more than 5%, while banks posted very strong gains from the opening bell. RBS rose 14%, Lloyds 10% and Barclays was up 7%. On the German Dax, both Commerzbank and Deutsche Bank advanced near 1%, even though the index was trading in the red.
“All eyes are now focused on the financials ahead of the stress test results,” TheLB-Forex.com Trade Team said. “It would not be a surprise to see the market put a positive spin on the stress test results, since the major financial institutions have already found ways to raise more cash and convert the government preferred shares to common shares, which would increase the bank’s tangible common equity,” they added.
One of the largest European banks, UBS, posted a 1.75 billion loss in the first quarter as the bank was forced to write-down the value of illiquid assets, again. Until now, UBS is the European bank most affected by the credit crisis, which has forced the bank to shed a large number of employees over the last few quarters, and sell some of its foreign assets. In the mean time, UBS’s direct competitor, Credit Suisse, reported a $1.80 billion profit during the first quarter. The shares of the two banks have moved very little this morning.
Overnight, the Japanese Nikkei was closed for a second consecutive day. The Australian S&P/Asx gained 7.40 points (0.19%) to 3,890.40. The U.K. Ftse rise 85.06 points (2.00%) to 4,328.28, while the German Dax fell 27.06 points (0.55%) to 4,875.39
Crude oil for May delivery was recently trading at $53.80 per barrel, down $0.70.
Gold for May delivery was recently trading higher by $1.10 to $903.20.