Mega merger possibilities, positive Chinese data and earnings saw the Dow set a new record yesterday but US markets are a looking a little more timorous this morning weighed down by potential fallout from more sanctions on Russia. Futures suggest the Dow Jones will open 34 points lower at 16,104 with the S&P500 expected to open 6 points lower at 1,975 and the Nasdaq 10 points lower at 3,922. In the latest round of sanctions, specific corporations including state oil company Rosneft have been targeted. These companies are being blocked access to US capital markets. Some of the largest multinational banks that Russian firms might use for funding are American so although the sanctions are surmountable, it does limit funding options. Oil prices are higher while stocks are lower this morning because the worry now for European and US corporations is that Russia retaliates with their own sanctions particularly in energy markets. Sentiment could easily turn more positive further into the session with a slew of earnings releases before the open from Morgan Stanley, Philip Morris, Unitedhealth, Baxter, Blackstone and Baker Hughes. After the closing bell Google, IBM and Schlumberger all report. Morgan Stanley is expected to earn 55c per share on revenue of $8.19bn. The bank outdid banking competition in the first quarter with a rise in fixed income trading. MS is more weighted towards investment banking than trading so has the potential to benefit from the increase in IPOs and M&A more so than rivals. Barring the mortgage markets fines, money centre banks have positively surprised so far and given Morgan Stanley’s asset mix they stand a good chance of participating in that trend. 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.
US markets timorous on Russian sanctions; Morgan Stanley earnings ahead
11:00, 17 July 2014