Futures Industry News
Imminent tax deal, labor market and Citigroup sale boost futures
Dec 07, 2010 08:25 AM
As President Barack Obama appeared prepared to push forward a compromise on the expiring Bush-era tax cuts and the federal government sold its $10.5 billion stake in Citigroup, stock index futures around the globe posted solid gains. Increased confidence in the labor markets, as measured by Milwaukee's temporary worker provider Manpower, Inc., also played a role.
"Commodities are setting records this morning and stocks are strong globally on Obama’s about-face on tax increases," Andrew Brenner of Guggenheim Securities told the Wall Street Journal's MarketBeat. "The president has not only approved an extension of the tax cuts for the wealthiest Americans, he has approved it for two full years."
Meanwhile, the U.S. Treasury sold 2.4 billion shares of Citigroup stock at $4.35 apiece, 10 cents shy of Monday's closing price. According to Bloomberg News, that brings the government's gains from the bank bailout to $12 billion. Early trading saw the bank's shares rise again, with investors buying into the storyline of its disentanglement from the government.
Dow Jones Industrial Average index futures rose 81 points to 11,343, while S&P 500 index futures gained 11.7 points to 1,233.80 at 9:14 a.m. EST. Nasdaq 100 index futures climbed 23.75 points to 2,214.25.
In Japan, Nikkei 225 index futures rose 80 points to 10,230, while Hong Kong's Hang Seng index futures jumped 286 points to 23,459 at 3:15 a.m. EST.
DJ Euro Stoxx 50 index futures rose 54 points to 2,823 at 9:22 a.m EST and FTSE 100 index futures gained 72.5 points to 5,849.
Mexican Bolsa de Valores index futures rose 328 points to 38,020, while Brazil's Bovespa index futures surged a massive 1,048 points to trade at 70,650 at 9:22 a.m EST.
"The scars of the crisis should gradually disappear," Christian Parisot, the head of global research at Aurel BGC, a Parisian investment firm, told Bloomberg News. "Growth will be slower but surer, which means investors will have to pay higher for upcoming corporate earnings. We are looking for a nearly 20 percent surge on the main stock market indices."
A wide variety of commodities also rallied, led by major gains in silver and copper. Rising demand - and speculation that JPMorgan may be forced out of a massive naked short position in silver futures, without the ability to cover with physical metals - pushed the white metal up 3 percent to $30.61 per troy ounce in early trading. Copper futures also rose, jumping 2.68 percent to $4.115 per pound.
Energy futures also gained, though natural gas futures slumped slightly to $4.485 per million British thermal units. Crude oil futures gained about 0.85 percent, with both the Brent crude and West Texas Intermediate light, sweet crude oil contracts breaking $90 per barrel.
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