Current Futures: Dow -96.00, S&P -9.10, NASDAQ -9.75

Asian and European markets endured downside movement during the latest sessions, which in turned dragged U.S. futures down by more than 1% during overnight trading.

Equity markets turned negative as Alcoa posted a second quarterly loss in Q1, and commodity prices declined on weaker outlook. Additionally, the financials declined as some investors are questioning if the recent Treasury actions are enough to resolve the problem of insolvent banks, since the IMF raised its forecast for bank write-downs to $4 trillion. “At this point in time, traders are still looking for clues to see if the current declines are just a standard retracement of March’s gains, or if the downtrend has started all over again” Trade Team said. 

A report released by the Congressional Oversight Panel suggests that the best way to revive the financial system is to get rid of executives, while filing for Chapter 11 on the insolvent banks. Additionally, the Treasury forecast for the economy may be too optimistic, the same report says. “Even though many market participants agree with these measures, since it helped governments deal with previous crisis, it may be a political fight at the core,” Trade Team said. “The oversight panel is formed by two Republicans and three Democrats, who discarded the report and issued a different report,” Trade Team added. 

The U.K. think-tank NIESR released a report on Tuesday showing that the economy contracted 1.5% in the first quarter. This follows a similar decline in the fourth quarter of 2008, when the economy contracted 1.6%. The projection should be viewed as reliable, since over the last few years, the forecasts have had a very small error margin, of 0.1 - 0.2%. The research institute points out that the downturn is being driven by slow demand coming from the consumer side, while business owners are cutting back on their inventory. Trade Team points out that the U.K. economy is expected to contract more than 3% in 2009, while the budget deficit is projected to reach a staggering 10%. 

Overnight, the Nikkei fell 237.84 points (2.69%) to 8,595.01. The Australian S&P/Asx slipped 86.80 points (2.34%) to 3,619.50. The U.K. Ftse declined 37.01 points (0.94%) to 3,893.51, while the German Dax fell 69.71 points (1.61%) to 4,252.79

Crude oil posted significant declines as equity markets were sold. Crude for April delivery fell $1.50 to $47.60.

Gold rose overnight, as the market moved into risk-aversion mode. Bullion for immediate delivery rose $5.40 to $888.70.