Following yesterday's modest gains, futures indicate a higher open for the mkt as Q1 write-downs at European investment banks UBS (UBS) and Deutsche Bank (DB) were lower than some investors had feared. The understanding that these banks are still adequately capitalized has also been an offsetting factor after UBS also announced it will ask shareholders to approve up to 15 bln Swiss francs ($15.07 bln) in additional funds to shore up its dwindling capital base, while Lehman Brothers (LEH) said it will offer 3 mln shares of convertible preferred stock. Lastly, Deutsche Bank upgraded shares of UBS to Buy from Hold this morning. Dow futures are currently +127; Nasdaq futures are currently +23.0; S&P futures are currently +15.3.
The Bond mkt is trading sharply lower this morning on the strength in equity futures and financial stocks. The 10-yr is currently -26/32 to 3.507%... In Commodities, the dollar is stronger this morning, particularly against the euro and yen, which is putting pressure on precious metals. June gold ($896.70 -24.80) has broken below the $900 level (low of $892.50), while May silver is trading off 54.5 cents to $16.765. May crude oil ($99.81 -1.77) is probing the $100 level (low of $99.68), helped by the weaker dollar and reports a fire on the Trans-Niger pipeline has not affected exports from the Bonny terminal, according to Royal Dutch Shell (RDS.A), and Iraq's southern oil fields will return to normal production volumes today after losing 150K bpd over the last three days due to power outages caused by clashes between the army and Shiite militants... In Europe, UBS charged higher, leading European mkts up on hopes that the banking sector may be at a turning point. FTSE is currently +1.3%; DAX is currently +1.9%; CAC is currently +1.8%. In Asia, mkts closed mixed as traders shrugged off a poor Tankan survey in Japan, but China's Shanghai Composite plunged to an 11-month closing low after the People's Bank of China late on Monday said policy would stay tight to fight inflation. Nikkei closed +1.0%; Hang Seng closed +1.1%; Shanghai Composite closed -4.1%... Notable pre-market Calls include Upgrades: UBS at Deutsche Bank, VMW at Wachovia; Downgrades: MO at Morgan Stanley, VMW at Credit Suisse; Miscellaneous: Goldman cuts Q1 ests on C and MER... On the Earnings calendar, EXFO and BLUD are the only companies confirmed to report today after the close... On the Economic calendar, the Mar ISM Manufacturing Index (consensus 47.5; prior 48.3) and Feb Construction Spending m/m (consensus -0.9%; prior -1.7%) are both due out at 10:00ET.
Gapping down in reaction to weak earnings/guidance: GBN -7.1%, BUF -6.4%, PCL -4.2%, RMG -4.1%, KRY -3.1%, TISI -3.1%, CNO -2.9%, APWR -1.0%...
Select metals/mining stocks showing weakness with lower spot prices on strength in the dollar: PAL -5.3%, KGC -4.1%, HMY -3.5%, GOLD -3.1%, HL -3.0%, AU -2.8%, CDE -2.7%, ABX -2.5%, GLD -2.4%, SLV -2.4%, GFI -2.3%, MT -2.0%, RTP -1.8%, NEM -1.8% (Newmont Indonesia offers to sell 7% to govt - Reuters.com)...
Other news: TMY -9.0% (terminates merger agreement), KFN -4.4% (announces proposed common share offering of 20 mln common shares; also downgraded to Peer Perform at Bear Sterns), ANR -4.0% (announces launch of capital markets transactions), YHOO -2.5% (Microsoft unlikely to raise Yahoo offer - WSJ)...
Analyst downgrades: AVCT -5.3% (downgraded to Sector Perform at RBC), HPT -4.5% (downgraded to Underperform from Market Perform at Wachovia), MO -3.6% (downgraded to Equal Wt at Morgan Stanley).
Gapping up in reaction to strong earnings/guidance: CDS +7.6%, SPIR +4.2%, GSI +3.6%, OXM +1.3%...
M&A news: CAO +18.2% (to be acquired by O'Reilly for $11.00 of O'Reilly common stock plus $1.00 in cash)...
Select financial names showing strength with a number of news items out: UBS +8.1% (co releases financial update, seeks fresh capital and expects $19 bln in write-downs; chairman will depart; also upgraded to Buy at Deutsche Bank), BCS +5.0%, RBS +4.1%, LEH +3.6% (to offer 3 mln shares of convertible preferred stock; analyst commentary on offering is generally positive), WM +3.5%, WFC +3.1%, DB +2.9% (faces write-downs of about $3.95 bln), WB +2.8%, MER +1.9%, MS +1.9%, DB +1.8%, C +1.8%...
Other news: TMA +35.5% (raised $1.35 bln through private placement of senior subordinated secured notes and warrants), CEGE +34.9% (Cell Genesys and Takeda announce global alliance for the development and commercialization of GVAX immunotherapy for prostate cancer), IMH +18.1% (announces the co has settled a majority of repurchase liabilities), ATN +4.9% (Cramer makes positive comments on MadMoney), VVUS +4.5% (completes special protocol assessment for Phase 3 efficacy studies and reaches agreement with FTA on the studies), NOK +3.8% (still checking), MOT +2.5% (Videocon to bid for Motorola's global mobile business, Chairman says - DJ), SRDX +2.3% (announces first human use of SynBiosys biodegradable polymer on cardiomind drug-eluting stent), STP +2.0% (Nitol Solar and Suntech expand Polysilicon supply agreement), DELL +1.4% (undertaking a strategic assessment of ownership alternatives for its Dell Financial Services financing activities), CYTK +1.2% (announces CK-1827452 demonstrates increase in left ventricular function with no increase in myocardial oxygen consumption in canine model), BAP +1.1% (Cramer makes positive comments on MadMoney)...
Analyst upgrades: HANS +4.8% (upgraded to Buy at tier 1 firm), PIR +4.5% (upgraded to Buy at Deutsche Bank and initiated with a Buy at Jesup and Lamont), BWLD +4.1% (upgraded to Outperform at Keefe Bruyette), AKAM +3.6% (upgraded to Buy at Piper), AZN +3.5% (upgraded to Neutral at JPMorgan), ANSS +3.0% (upgraded to Buy at Jefferies), ATHR +2.8% (upgraded to Overwt at Weisel), VMW +2.8% (upgraded to Outperform at Wachovia), WBD +2.6% (upgraded to Buy at Merrill), ADBE +1.6% (added to Alpha List at Piper Jaffray), AAPL +1.5% (reinstated with Buy at Merrill), BG +1.3% (upgraded to Outperform at BMO).
