Concerns over Portugal’s banking system are being cast aside with Banco Espirito Santo considered a one-off and unlikely to cause contagion; a rally in Asian and European stocks are precipitating a likely higher open for US markets ahead of earnings from America’s third biggest bank Citigroup. Futures suggest the S&P500 will open 7 points higher at 1,974 with the Dow Jones expected to open 68 points higher at 17,011 and the Nasdaq 19 points higher at 3,923. Absent any contagion effect from Portugal’s Banco Espirito Santo’s problems last week, the main focus of the week is likely to be the numerous Dow and S&P 500 companies reporting earnings in the US. The drop in stocks last week may actually favour more positive reactions to earnings this week since investors can buy on the dip rather than having to buy more overbought markets near the highs. Tomorrow will be the more significant day for US economic data with the release of retail sales and beginning of the congressional testimony from Fed Chair Janet Yellen. Citigroup are expected to report earnings of $1.05 per share on revenue of $18.93bn. This would be a 14% decline in EPS from last year. The stock has a P/E of 11.08 and is currently trading at $47 down from $55 at the start of the year. Decreases in loan activity, lower fixed income trading activity and ongoing regulatory fines (including an upcoming $7bn fine over the selling of mortgage securities before the financial crisis) have forced the bank into selling off assets and lay-offs. With so many headwinds the bank faces a tough time ahead but with such a lowered bar for expectations, there remains some possibility for a positive earnings surprise before the open. CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.