Current Futures: Dow -90.00, S&P -11.00, NASDAQ -14.25
European markets surged higher on Tuesday morning, but started to erase those gains as U.S. futures plunged lower. Asian shares closed the session below the breakeven line, while U.S. futures traded mixed in the early part of the overnight session, in a low liquidity environment, but then fell at a sustained pace.
During the Asian session, commodity stocks drove the market lower. However, the commodity market reversed the decline from the Asian session, and pulled the raw material producers higher in the major indexes. In particular, copper rallied 2.7% during the overnight market, helping the whole industrial sector. TheLFB-Forex.com Trade Team stated that “metals rallied on increased demand from China and Eastern Asia, since the spread between the commodities markets in Asia and Europe is widening”.
Except for the commodity shares that advanced during the European session, the other major industries, such as car manufacturers and financials headed lower, gaining momentum as the session progressed.
Today, Alcoa will be the first company to announce its earning for the first quarter. The following weeks will be crucial for overall market sentiment, since the quarterly results help investors gauge how the company (or the sector) is handling the credit crisis. In recent times, the financials’ results would have been very important, but TheLFB-Forex.com Trade Team noted this may not be the case this time. “The main reason is that the FASB relaxed the mark-to-market rules, which forced banks to use the real market price for their assets. From now, banks will use their own valuation model, giving room to improve and give a face-lift to the balance sheets”. Investor George Soros said about the new accounting rules that it will keep alive the “zombie bank”.
Overnight, the Nikkei fell 25.08 points (0.28%) to 8,832.85. The Australian S&P/Asx slipped 50.30 points (1.34%) to 3,706.30. The U.K. Ftse gained 37.53 points (0.94%) to 4,031.07, while the German Dax rose 23.66 points (0.54%) to 4,373.47
Crude oil reversed the declined seen in Asian session, and rose $0.65 to $51.70.
Gold strengthened as risk-aversion returned during the ealy part of the overnight session. Bullion for immediate delivery rose $7.90 to $880.70.