Current Futures: Dow +58.00, S&P +6.30, NASDAQ +12.00
European Trade: European equity markets rose, as did the U.S. futures during the overnight session. Asian equity markets closed the trading session lower, even though the major indexes had posted strong gains by the middle of the session.
Only three companies declined in the U.K.’s Ftse index. Banks and Commodity stocks led the gains, while the retailed Marks & Spencer rose almost 9% after posting better than expected sales. On the German Dax, the car-manufacturers were trading mixed, while banks rose. In particular, Commerzbank rose 13% in the first few minutes of trading, after a similar decline yesterday.
Headlines continue to appear about GM and Chrysler’s fate today. In a CNBC interview, GM’s CEO Fritz Henderson said that bankruptcy might be the best option for the carmaker. However, Henderson said he would prefer to restructure the company outside of the court, and avoid Chapter 11.
Chrysler might also be very close to bankruptcy, since most analysts say that the deadline to reach an agreement with Fiat, in about a month, is not enough time. Additionally, Chrysler has to agree on new labor costs with the union, and has to renegotiate much of its debt before the deadline expires. This will be very hard to overcome, since, in bankruptcy cases, the debt holders are the first to be re-paid by selling the company’s assets. President Obama’s task force notes that an “expedited bankruptcy project” might be the only chance Chrysler has.
In Europe, Ireland is the second country that lost its triple-A debt rating since the beginning of January, following Spain. Standard & Poors reduced the country’s debt rating to AA+, with a negative outlook as the public finances keep worsening. Both Ireland and Spain were hit very hard by the credit crisis, and now they are facing huge housing bubbles. Ireland’s economy contracted a massive 7.5% in Q4, the country’s first recession since the early 1980’s.
Also in Europe, the Ukraine has ruled that local banks should buy and sell the national currency, hryvnia, at a rate set by the Senate. In addition, the Ukraine has imposed strict capital controls, in order to overcome strong cash outflows, which destabilized the local currency and the economy. Even though the central bank depleted one third of its reserves to stop the hryvnia decline, the currency has plunged almost 40% in the last few months.
Tonight, the Nikkei fell 126.55 points (1.54%) to 8,109.53. The Australian S&P/Asx shed 22.30 points (0.62%) to 3,582.10. The U.K. Ftse rose 90.75 points (2.41%) to 3,853.66, while the German Dax gained 52.23 (1.31%) to 4,041.46
Crude oil advanced in the overnight session, retracing some of the declines seen yesterday. Crude oil for April delivery rose $0.50 to $49.90
Gold rose, helped by positive equity markets. Bullion for immediate delivery gained $5.00 to $922.70.