Treasury plan: The U.S. government said late Sunday that it will initially commit up to $100 billion to subsidize private investors' purchase of the so-called toxic assets on bank books that have led to the seizure of the credit markets.
"Over time, by providing a market for these assets that does not now exist, this program will help improve asset values, increase lending capacity by banks, and reduce uncertainty about the scale of losses on bank balance sheets," Treasury Secretary Tim Geithner wrote in an op-ed in the Wall Street Journal.
The aim of the public-private partnerships is to buy up at least $500 billion of bad assets, and possibly up to $1 trillion over time. Geithner will unveil details of the plan at 8:45 a.m. ET.
Peter Cardillo, chief market economist for Avalon Partners, said that futures are responding positively to the notion that the Obama administration is "being less hostile toward the private sector."
"We're headed for a nice open," said Cardillo, adding that an unexpectedly positive housing sales report could further drive the stock markets.
Economy: After the open, investors will focus on the monthly figures for existing home sales. Sales are expected to slip to an annual rate of 4.45 million for February, according to a consensus of economist opinion from Briefing.com. That would be down from the January rate of 4.49 million.
Deals: Suncor Energy (SU) agreed to buy rival Petro-Canada (PCZ) for about $14.86 billion. The deal will expand the company's oil sand reserves and create Canada's biggest energy company.
World markets: Stocks around the world rallied as investors awaited full details of Geithner's plan. Japan's Nikkei gained 3.4% while the Hang Seng in Hong Kong surged 4%. In Europe, the FTSE 100 added 1.7% in early trading. The CAC-40 in France and Germany's DAX were also both up more than 1%.
Oil and money: Oil rose 48 cents a barrel to $52.55. The dollar dipped versus the euro and the British pound, but rose against the yen.
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Markets have been reacting positively for the past 2 weeks. Does this mark that the bear market is coming to an end? Is the bulls coming back again? Well, noone really knows..
USD/YEN trading at 96.76 - 96.78 +1.29, edging slowly upwards. The high yen rate has probably killed alot of jap exporters and this coming months will probably be exciting as more companies will be reporting their 2008 full year results.
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