Markets On Back Foot After Greek Deal

(RTTNews) - The major U.S. index futures are pointing to a mixed opening on Monday, with markets reflecting caution even as Greece successfully haggled a deal. Though the development may bring temporary relief to the markets, the risk fraught deal that necessitates Greece to propose reform plans to fall in line with the Eurogroup dictates could give rise to an uneasy calm. Oil prices have begun to pullback sharply. The U.S. existing home sales report due shortly after the markets open may give some direction to the apprehensive markets.

U.S. stocks added to their recent gains in the week ended February 20th, as an increase in oil prices early on in the week, mixed economic data and positive expectations concerning a Greek debt deal extended the upward momentum of the markets.

Last Tuesday, when the markets opened after the President's Day holiday, the major averages shrugged off Greek debt concerns and ended higher, as oil's rally offered some support to the markets. Weighed down by some lackluster domestic economic data, stocks meandered to a mixed close on Wednesday, although dovish FOMC minutes offered some encouragement.

The major averages closed mixed once again on Thursday, as traders reacted to news about the Greek debt crisis and mixed economic data. After a negative open and weakness in early trading on Friday, the major averages recovered and finished solidly higher, as news spread around that Greece succeeded in getting an extension of its bailout agreement.

For the week ended February 20th, the Dow Industrials and the S&P 500 Index added 0.67 percent and 0.63 percent, respectively, while the Nasdaq Composite rose 1.27 percent. Both the Dow Industrials and the S&P 500 Index ended the week at fresh record closing highs of 18,140 and 2,110, respectively.

Among the sectors, the NYSE Arca Biotechnology Index rallied 3.83 percent for the week, while the NYSE Arca Airline Index, the Dow Jones Utility Average and the Dow Jones Transportation Average all gained over 1 percent. On the other hand, the NYSE Arca Gold Bugs Index slumped 3.45 percent and the NYSE Arca Oil Index slid 1.85 percent.

Currency, Commodity Markets

In the first day of trading as the front month contract, crude oil futures for April delivery are slipping by $1.63 to $50.46 a barrel. The March futures, which expired last Friday, slipped $2.44 or 4.62 percent to $50.34 a barrel in the week ended February 20th.

Last Tuesday, oil added to its gains by advancing moderately. However, amid the release of the weekly petroleum status report, the commodity fell close to $1.40-a-barrel on Wednesday.

Oil fell close to $1-a-barrel on Thursday before declining moderately on Friday, thereby ending down in 3 out of the four sessions of the week.

Gold futures, which declined $22.20 or 1.81 percent to $1,204.90 an ounce in the previous week, are currently moving down $3.20 at $1,201.70 an ounce.

Among currencies, the dollar turned in a mixed performance in the week ended February 20th, with the greenback slipping 0.46 percent against the yen before ending at 119.03. At the same time, the euro added 0.23 percent versus the dollar over the week to $1.1381, with the common currency receiving some support from the Greek bailout extension and positive private sector activity data from the region.

The U.S. dollar is currently trading at 118.96 yen and is valued at $1.1316 versus the euro.

Asia

Most markets in Asia advanced, led by the Japanese market, as there was a feeling of relief over the Greek crisis reaching an amicable settlement, albeit on a temporary basis. While the Chinese and Taiwanese markets remained closed on account of the extended Lunar New Year break, the Indian and the Singaporean markets bucked the uptrend.

The Japanese market hovered in positive territory throughout the session, as the yen was trading in a subdued manner. The Nikkei 225 average opened higher and moved sideways in the morning. Although the average legged down in the afternoon, it ended 134.62 points or 0.73 percent higher at 18,467, representing a near 15-year high.

Export, utility, construction, telecom and pharma stocks gained ground, while financial and resource stocks came under selling pressure.

Australia's All Ordinaries showed some apprehension in early trading but subsequently launched into a rally. The index went about a consolidation move in the afternoon before closing up 26.80 points or 0.46 percent at 5,872.

Most sectors found buying interest, with real estate, consumer and financial stocks leading the gains.

Hong Kong's Hang Seng Index, which languished below the unchanged line for the better part of the session in post-holiday trade, ended up merely 4.68 points or 0.02 percent at 24,837.

The minutes of the January 20-21st Monetary Policy Board meeting of the Bank of Japan revealed that the members believe that the pace of the country's economic recovery remains moderate. They also noted that capital spending was on the upswing as corporate profits continued to grow.

At the meeting, the bank decided to maintain its policy of raising the monetary base by 80 trillion yen per year by an 8-1 vote. While lowering its core inflation estimate for 2015 to 1, the bank raised its growth forecast by 0.6 points to 2.1 percent.

Europe

European stocks opened higher, in an early reaction to the Greek debt deal, but have given back most of their early gains since then. The averages in the region are currently trading on a mixed note.

Greece walked away with a 4-month extension to its bailout deal after much bickering within the eurogroup, with Germany being the most vocal against the extension. The seemingly amicable solution has not come without its price. Greece is required to submit a proposal to the eurogroup on reform measures, which would be against the spirit of the leftist Syriza party.

In corporate news, cement maker Holcim reported better than expected profits for 2014 and also stated that its pending merger with Lafarge is on track to be completed in the first half of 2015. HSBC (HBC) reported a decline in 2014 profits, affected by the challenging year.

Associated British Foods said trading remains in line with forecasts and reiterated its earnings guidance for 2015. Bovis Homes reported a sharp rise in its annual profits.

On the economic front, a measure of German business confidence rose less-than-expected in February, according to the results of a key survey by the IfO Institute. The IfO business climate index climbed to 106.8 in February, while it was expected to rise to 107.6. In January, the score was 106.7. Meanwhile, the current conditions index unexpectedly fell to 111.3 from 111.7, while it was expected to rise to 112.7.

U.S. Economic Reports

Fed speeches, housing, and consumer and manufacturing readings are expected to dominate events on Main Street in the unfolding week. Traders may focus on the National Association of Realtors' existing home sales and pending home sales reports and the Commerce Department's new home sales data along with the results of two separate house price surveys by S&P/Case-Shiller and the Federal House Finance Agency.

Also in the spotlight are the results of two separate consumer confidence surveys for February by the Conference Board and the University of Michigan, MNI Indicator's Chicago business barometer for February, the jobless claims report and the Commerce Department's durable goods orders data for January. Federal Reserve Chair Janet Yellen's semi-annual Congressional monetary policy testimony and a few Fed speeches may also attract attention.

The results of a few regional manufacturing surveys, the Labor Department's consumer prices report for January, fourth quarter GDP data and the results of the Treasury Department's auctions of 2-year, 5-year and 7-year notes round up the economic events of the week.

The Chicago Federal Reserve is scheduled to release its national activity index for January at 8:30 am ET. Economists expect the index to rise to 0.15 in January from -0.05 in December.

Markit is due to release the results of its preliminary non-manufacturing survey for February at 9:45 am ET. The consensus estimate calls for a small increase in the index to 54.2 from 54 in January.

The National Association of Realtors is set to release its existing home sales report for January at 10 am ET. Economists expect existing home sales to come in at a seasonally adjusted annual rate of 4.950 million units in January compared to a 5.040 million unit rate for December.

In December, existing home sales rose 4.2 percent month-over-month to a seasonally adjusted annual rate of 5.04 million units following a revised 6.3 percent drop in November. Single-family home sales climbed 3.5 percent, while condominium sales fell 5 percent. Inventories measured in terms of months of supply fell to 4.4 months from 5.1 months in November.

At 10:30 am ET, the Dallas Federal Reserve is scheduled to release the results of its regional manufacturing survey. The consensus estimate calls for an improvement in the index to -2.8 in February from -4.4 in January.

Stocks in Focus

Valeant Pharma (VRX) announced a deal to buy Salix Pharma (SLXP) for $158 per share in cash or a total enterprise value of $14.5 billion. The deal is set to close in the second quarter of 2015. Separately, the company reported fourth quarter cash earnings of $2.58 per share on revenues of $2.3 billion. For the first quarter, the company expects cash earnings of at least $2.30 per share.

Shire (SHPG) announced the successful completion of the tender offer to buy all outstanding shares of NPS Pharma (NPS) and the subsequent acquisition of NPS.

Cooper Tire & Rubber (CTB) reported a sharp increase in its fourth quarter earnings, boosted by a one-time gain. Revenues were ahead of estimates. The company also announced a $200 million stock buyback authorization.

AAR Corp. (AIR) said it has agreed to sell its Telair Cargo Group of business to TransDigm Group Inc. (TDG) for a purchase price of about $725 million in cash, subject to adjustments. The Telair Cargo Group is comprised of Telair International, Telair U.S., and Nordisk Aviation Products.

Darden Restaurants (DRI) Monday announced the appointment of Eugene Lee, Jr. as chief executive officer and director, effective immediately. Lee Jr. has been serving as interim chief executive officer.

ADTRAN (ADTN) announced the retirement of its CFO James Matthews, effective March 16, 2015 and the appointment of company executive Micahael Foliano to the post of CFO on an interim basis.

Responding to demands by Marcato Capital Management to return $500 million of capital to shareholders, Sotheby's (BID) said it would delay any capital allocation decisions until the appointment of a new CEO.

Express Scripts (ESRX), PDL Biopharma (PDLI) and Tenet Healthcare (THC) are among the companies due to release their quarterly results after the close of trading.