In the U.S.: Stock futures rise on China stimulus hopes; data eyed

29 May 2012

China’s expansionary trajectory and Greece’s potential acceptance of bailout terms, set to to lift markets higher.

Stock index futures rose on Tuesday, indicating a rally in equities may continue after their first weekly gain since April, on hopes China may unleash more spending measures and Greek election polls pointed to support for conservative parties.

The official Shanghai Securities News reported on Tuesday, citing unidentified sources, that China’s biggest banks appeared to have accelerated lending toward the end of this month as Beijing starts to fast-track its approval of infrastructure investments in an effort to stem sagging growth.

Investors were also encouraged by weekend polls in Greece that showed the conservative New Democracy party, which backs the country’s international bailout, has a lead over the leftist SYRIZA party, which opposes it ahead of a June 17 election. In Ireland, voters appear poised to reluctantly approve Europe’s new fiscal treaty.

“The market is starting the abbreviated week on what investors want to hear with China taking proactive measures to stimulate their economy, with Greek polls favoring conservatives and with Ireland cooperating with euro zone plans,” said Andre Bakhos, director of market analytics at Lek Securities in New York.

“Alongside the news headlines, the market is eyeing key economic data which could easily continue the market push or reverse the fortunes – it’s the kind of market that could produce erratic, choppy and wide-ranging swings.”

But concern about Spain’s banking system continued to weigh on investors, causing the FTSEurofirst 300 .FTEU3 to pull back from early gains as yields on 10-year Spanish bonds remained just under 6.5 percent. Many investors view the 7-percent mark as unsustainable, which could trigger the need for a bailout.

U.S. data expected on Tuesday includes the S&P/Case Shiller Home Price Index for March at 9:00 a.m. (1300 GMT). Economists expect the 20-city seasonally adjusted index to rise 0.2 percent month over month, the same increase as in February.

May consumer confidence numbers from the Conference Board, an industry group, are due at 10 a.m. (1400 GMT). Economists expect a rise to 70.0 from 69.2 in April.

S&P 500 futures rose 8.7 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 104 points, and Nasdaq 100 futures added 19 points.

Opera Software (OPERA.OL) shares soared more than 20 percent in Oslo on Tuesday on talk Facebook Inc (FB.O) was in discussion to buy the firm, while analysts said competition from Google Inc (GOOG.O) and others could push the price tag of any deal above $1 billion. Facebook shares were off 2 percent to $31.28 in premarket.

Vertex Pharmaceuticals Inc (VRTX.O) plunged 17.5 percent to $53.50 in premarket trade after the drugmaker released corrected data involving its cystic fibrosis treatments on Tuesday that lowered the number of patients who showed certain levels of improved lung function.

Defense equipment manufacturer Teledyne Technologies Inc (TDY.N) said it would buy LeCroy Corp (LCRY.O) for $240.5 million in cash to add more products to its portfolio.

JPMorgan Chase & Co (JPM.N) has sold an estimated $25 billion of profitable securities in an effort to prop up earnings after suffering trading losses tied to the bank’s now-infamous “London Whale,” derivatives losses at its London office, compounding the cost of those trades.

Asian shares advanced over speculation about China’s possible push to avoid a slowdown.


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