US markets look set to open slightly higher today after yesterday’s unsettling statements from President Obama over possible further sanctions on Russia and five banks including Citigroup having their capital plans rejected by the Federal Reserve. Futures suggest the S&P500 will open 1 point higher at 1,853 with the Dow Jones expected to open 17 points higher at 16,285. The financial collapse of 2008 with associated bank bailouts is still fresh in the memory so news that Citigroup and the US units of HSBC, RBS and Santander are not sufficiently capitalised to pay for increased dividends and buybacks in the case of a ‘stress’ scenario is not especially welcome. The banks can theoretically turn this around though once they resubmit newer capital plans and gain Fed approval. Yesterday 1873 was mentioned as key level in the S&P that the index needs to close above to make some headway. This proved the case again yesterday as life at 1875 was short-lived before the index erased all the previous day’s gains. When US indices are close to yearly highs, watching Candy Crush game-maker King Digital entertainment getting crushed over 15% in the worst first-day results for a significant US IPO in the last 15 years hardly wetted risk-taking appetite. US 4th quarter final GDP numbers are expected to show an upward revision from 2.4% to 2.7%, which is likely to have been driven by an upward revision to personal consumption to 2.8% from 2.6%. While this is the last revision and shouldn’t make too much difference to markets today, GDP growth and unemployment are the key bell-weathers keeping the US economic recovery hopes alive so this figure will be closely watched. Weekly jobless claims are expected to remain steady at 325k, while pending home sales for February are expected to remain weather affected declining 8.5% year on year. Bank of America could be in play again today following good news of its first dividend increase in years but bad news of a hefty $9.5bn settlement with regulators over misleading mortgage sales. While the settlement is huge, it does at least remove some uncertainty of the impact of fines on future earnings.
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