U.S. Stocks Set to Climb Economic optimism boosted global markets Monday
By Will Andrews
U.S. stock index futures were higher ahead of the start of trading Monday, pointing to a positive open for Wall Street. Asian markets soared overnight, while European markets were higher in early trading.
Treasuries were little changed to slightly higher Monday morning, having rebounded from overnight losses. The dollar index was higher; an IMF official said the greenback "appears to be reasonably valued" in an interview with Reuters television. Gold futures were flat. Oil futures were narrowly mixed.
Global markets are pricing in a strong, V-shaped economic recovery, says S&P MarketScope.
Indeed, leading central bankers such as Federal Reserve Chairman Ben Bernanke and European Central Bank President Jean-Claude Trichet have made upbeat comments about the recession bottoming. But both have said the recovery will be slow.
But doubters remain. New York University professor Nouriel Roubini, in a Financial Times commentary, said the chance of a double-dip recession is increasing because of risks related to ending global monetary and fiscal stimulus, Bloomberg News reported. The global economy will bottom out in the second half of 2009, Roubini wrote. The recession in the U.S., the U.K., and some European countries will not be "formally over" before the end of the year, while the recovery has started in nations such as China, France, Germany, Australia and Japan, he said.
"The markets have traded in recent weeks as if they were from different planets," wrote analysts from Action Economics Monday. "Most global equity markets have been buoyed by recovery enthusiasm ... [while] bonds have been boosted by concerns the recovery will be stilted."
There were no significant U.S. economic reports scheduled for release Monday to refute or back up the recovery argument.
Eurozone June industrial orders rose by a more than expected 3.1% after falling 0.5% in May.
Among companies in the news Monday, specialty drug maker Warner Chilcott (WCRX) is expected to announce as early as today the acquisition of Procter & Gamble's (PG) prescription-drug business for more than $3 billion, say people familiar with the matter, according to a Wall Street Journal report. The deal may be a sign that the market for loans on more highly levered deals may be loosening.
Mannatech (MTEX) said its directors have suspended the quarterly cash dividend payment to shareholders, citing recent company financial performance, protracted worldwide economic recession, and the internal funding needs of new initiatives designed to accelerate sales and associate recruitment at the company.
Knoll (KNL) said it has filed a universal shelf registration statement on Form S-3 with the SEC. Upon being declared effective, the shelf registration statement will permit Knoll to offer and sell from time to time, up to $300 million of equity, debt, or other types of securities in one or more future public offerings.
Andrews is managing editor of the Investing Channel for BusinessWeek.com .