28th Apr 2014 11:47
LONDON (Alliance News) - US stocks are set to open higher Monday, buoyed in the same way as UK and European indices have been this morning: global merger and acquisition activity.
At the same time, markets await news of further sanctions against Russia.
US stocks struggled on Friday, with the S&P 500 and DJIA both closing down about 0.8%, while the Nasdaq Composite closed down 1.8%. Despite a boost earlier in the week from better-than-expected earnings from technology bellwethers Facebook and Apple, investors showed nervousness over the conflict in Ukraine by using the short-term boost as a better level to sell stocks ahead of the weekend amid concern that the situation could easily get worse.
The situation did get somewhat worse over the weekend, with Russian separatists taking control of further buildings in eastern Ukrainian cities, including a TV station from which they intend to broadcast Russian state television, and taking hostage a number of international observers on the accusation that they are NATO spies.
While stocks in Europe are currently benefiting from heightened merger and acquisition activity, further sanctions against people close to Russia's president Putin and the Russian elite are expected to be announced at any time, with a potential market impact. For now, the expectation is that any new sanctions will continue to be targeted at individuals, as opposed to countrywide trade bans.
"The sanctions seem intended to be targeted rather than wide ranging and as such it seems the implications may be just for specific stocks involved rather than whole industries," said CMC Markets market analyts Jasper Lawler.
The US futures markets are currently indicating that the DJIA, the S&P 500, and the Nasdaq Composite all will open about 0.5% higher.
The majority of US earnings reports over the past two weeks have beaten expectations, and that has kept stock markets supported, despite the ongoing geopolitical tensions. The earnings reports continue Monday with insurance group Lowes Corp and technology company Corning Inc both reporting. The firms are expected to announce earnings of USD0.70 per share and USD0.30 per share, respectively, in their first quarters.
US pharmaceutical giant Pfizer will be in focus after confirming its bid interest in the UK's AstraZeneca. Pfizer shares are up almost 1.0% in the pre-market. On the UK market, AstraZeneca has continued to rise since its jump at the open, now trading up almost 17% on the expectation that shareholders will be bought out for a significant premium.
While AstraZeneca, one of the biggest companies in the FTSE 100, is providing a significant boost to its index, Quindell, one of the biggest AIM-listed companies is continuing to drag on the AIM All-Share index.
Quindell shares are down 20% Monday, and are now down more than 50% since the start of last week, when US short sellers Gotham City Research trashed the stock in a scathing report.
Ahead of the US market open, the FTSE 100 is up 0.4% at 6,711.38, while the FTSE 250 is trading flat at 15,882.74, and the AIM All-Share is down 0.4% at 816.18.
The US dollar remains a little softer across the board Monday, with the pound trading at a near four-and-a-half year high of USD1.6840, and the euro trading at a two-week high of USD1.3870.
Still to come Monday, pending home sales at 1400 GMT, followed by the Dallas Fed manufacturing index for April at 1430 GMT.
By Jon Darby; [email protected]; @jondarby100
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