Monday, March 23, 2009

Futures soar on U.S. plan to buy toxic assets

U.S. stock futures rallied early Monday, as investors expressed optimism about the Obama administration's plan to seek the help of private investors as it attempts to rid banks of possibly as much as $1 trillion in bad assets.

At 5:16 a.m. ET, Dow, S&P 500 and Nasdaq 100 futures were sharply higher. Futures measure current index values against perceived future performance and offer an indication of how markets may open when trading begins in New York.

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.
Economy: Investors will be watching a report on manufacturing in New York. The Empire manufacturing report for March is due out at 8:30 a.m. ET. Readings on industrial production and capacity utilization in February are on tap at 9:15 a.m. ET.

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 group.
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 1.4% in early trading. The CAC-40 in France and Germany's DAX were also both up more than 1%. To top of page

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