China made a significant statement of intent with its surprisingly large cut to the reserve ratio; it tells us The People’s Bank of China has now fully entered the monetary easing game. This game-changing move is still working its way through world equities, which are trading higher from Asia through Europe, to an expected higher open in the US.
If the world’s second-largest economy eases policy, it goes some way to offset concerns of tightening from the largest. It is a reminder that central banks are still backstopping markets.
Earnings contributed to the renewed optimism in the US on Monday with Morgan Stanley (NYSE:MS) adding to the banking turnaround by beating estimates thanks a jump in equity and fixed income trading. Profits are coming ahead of estimates for the majority of firms who have reported so far but revenue growth remains an issue.
Technology shares led the rally with IBM (NYSE:IBM) and Facebook (NASDAQ:FB) strong ahead of earnings releases, although IBM looks like opening lower with weakness in its hardware business and a strong dollar hurting revenues, even as profits beat expectations.
Yahoo! (NASDAQ:YHOO), Verizon, United Technologies, DuPont (NYSE:DD), Yum Brands, Lockheed Martin, Baker Hughes and Chipotle Mexican Grill all report earnings on Tuesday.
Futures suggest the:
S&P 500 will open 4 points higher at 2,104 with the
Dow Jones expected to open 39 points higher at 18,073 and the
Nasdaq 100 13 points higher at 4,430.
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