After a breezy performance in recent weeks, Wall Street faces a real test on Monday, as traders watch the developments in Cyprus amid their uneasiness over the overbought levels. The index futures point to a sharply lower opening after Asian stocks closed sharply lower, while the European markets are also seeing broad based weakness. Financial stocks are among the worst performers in the overseas markets, as fears of a bank run in Cyprus is taking the wind out of the sails of the markets. With the preoccupation shifting to the eurozone and Cyprus in particular, a housing report due for the day may have little bearing on the market.
As of 6:15 pm ET, the Dow futures are moving down 71 points, while the S&P 500 futures are tumbling 12.10 points and the Nasdaq 100 futures are declining 26.75 points.
U.S. stocks advanced yet again in the week ended March 15th, as the markets remained resilient amid the release of some fairly positive economic data.
After recent economic data cemented expectations concerning a slow, steady and uninterrupted recovery, the FOMC meeting and a few housing reports are likely to render more clarity on the economic outlook in the unfolding week. Traders are likely to closely watch the 2-day FOMC meeting, the accompanying policy statement, the central bank's updated forecasts and the Federal Reserve Chairman Ben Bernanke's press briefing to get some sense of the Fed's thinking on how the monetary policy should be tweaked around in order to preserve the economic recovery amid the uncertainty the global economy is facing.
The National Association of Home Builders' housing market index for March, the Commerce Department's housing starts report for February, the National Association of Realtors' existing home sales report for February, the results of the Philadelphia Federal Reserve's manufacturing survey for March and the weekly jobless claims may also be in the spotlight. The Conference Board's leading economic indicators index for February, the Federal House Finance Agency's house price index for January and announcements concerning the Treasury auctions of 2-year, 5-year and 7-year notes round up the economic events of the week.
The National Association of Home Builders is scheduled to release the results of its homebuilder sentiment survey for March at 10 am ET. Economists estimate the housing market index to rise to 47 from 46 in the previous month.
In corporate news, Apache (APA) recommended that its shareholders reject a mini-tender offer by TRC Capital to purchase up to 1.5 million shares or about 0.38 percent of Apache's common stock at $72 per share. The company noted that the offered price was 4.65 percent below the stock's closing price on March 11th, the day prior to the offer.
The major Asian markets fell across the board, weighed down by Eurozone concerns. Japan's Nikkei 225 average opened notably lower, as the safe haven yen found support from the developments in Cyprus and exerted downward pressure on export stocks. The index continued to consolidate around the depressed levels before closing down 340.32 points or 2.71 percent at 12,221.
Australia's All Ordinaries closed down 101.90 points or 1.99 percent at 5,027. The selling pressure was broad based, with material, healthcare, energy, financial, utility and consumer staple stocks bleeding heavily.
Hong Kong's Hang Seng Index closed at 22,083, down 449.75 points or 2 percent. Meanwhile, China's Shanghai Composite slid 38.39 points or 1.68 percent before closing at 2,240, choked by the general rise in risk aversion and worries over the impact property tightening measures can have on domestic growth.
European stocks are trading notably lower, hurt by the risk aversion engendered by Cypriot bailout terms.
Last weekend, Eurozone finance ministers, the International Monetary Fund and the Cypriot government agreed on a bailout package for Cyprus, comprising 10 billion euro contribution from Europe and the IMF combine and an estimated 5.8 billion euro contribution from depositors in the Cyprus banking system. The contribution from the banking system is to come through a 6.75 percent one-off tax on deposits below 100,000 euros and 9.9 percent taxation on deposits at or above 100,000 euros.
The Cypriot parliament is due to vote on the agreement clinched over the weekend. The proposed change has invited opposition from all quarters in the nation, as it is seen to unnecessarily tax the deposit holders.
In corporate news, Ericsson (ERIC) and STMicroelectronics (STM) announced an agreement for their joint venture ST-Ericsson. According to the agreement, Ericsson will take over the design, development and sales of the LTE multimode thin modem products, while ST will take on the existing ST-Ericsson products. The remaining parts of ST-Ericsson will be closed down. While Ericsson will take over 1,800 employees and contractors, ST will assume about 950 employees.
Transocean (RIG) announced that its board has determined that billionaire investor Carl Ichan's proposals to declare a $4 per share dividend and elect three of his nominees to the company's board at its 2013 AGM is in conflict with its disciplined capital allocation strategy.
The housing market recovery in the U.K. is gathering momentum, according to a report released by the Rightmove.
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