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The S&P 500 and Dow on Friday posted their best
day since March on news that Russia was ending military drills
near the Ukrainian border, a move that was seen as indicating
Russia would not send troops into Ukraine anytime soon. European
shares rose more than 1 percent on Monday.
With earnings season nearly over, market action is likely to see
an outsized influence from geopolitical issues, especially from
the Middle East due to the region's impact on the commodities
markets.
The United States recently launched air strikes in Iraq
targeting Islamic State fighters marching on the country's
Kurdish capital. The U.S. is also pushing for a new Iraq
government, which Prime Minister Nuri al-Maliki has been
battling to prevent, deploying forces across Baghdad as some
parliamentary allies sought a replacement.
In the Middle East, Israel and the Palestinians agreed on Sunday
to an Egyptian proposal for a new 72-hour ceasefire in Gaza.
The CBOE Volatility index has been at relatively elevated levels
of late, closing above 15 every day this month. While 15 is well
below the VIX's long-term average of 20, it follows a
multi-month period where the so-called "fear index" rarely
closed above 13.
S&P 500 e-mini futures rose 8 points and were below fair value,
a formula that evaluates pricing by taking into account interest
rates, dividends and time to expiration on the contract. Dow
Jones industrial average e-mini futures rose 57 points and
Nasdaq 100 e-mini futures added 20.5 points.
In company news, MannKind Corp rose 21 percent to $9.82 in
premarket trading after French drugmaker Sanofi signed a
worldwide licensing agreement with the company worth up to $925
million. MannKind was the Nasdaq's most active premarket mover.
Kinder Morgan Inc on Sunday said it would put all its publicly
traded units under one roof in a $70 billion deal, an amount
including $27 billion in assumed debt. The company was
responding to investor concerns about its growth prospects and
complicated financial structure. Shares jumped 8 percent to $39
in premarket trading.
Stocks that pay high dividends, including utility and
telecommunication names, may see increased demand as Treasury
yields fall. The utility sector is one of 2014's strongest, up
8.8 percent as investors have sought more defensive plays
throughout the year.
(Editing by Chizu Nomiyama)
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