Morning Market Update

Markets Tee Up an Advance

Stocks are looking to start the session higher after concerns in Greece ease and traders weigh economic data from the past several weeks and strong same-store sales results from retailers yesterday as further evidence of a global recovery. In equity news, the Wall Street Journal is reporting that 18 major banks have masked their risk levels by making temporary changes in debt just prior to reporting quarter-end results and Reuters is reporting that Boston Scientific Corp has hired an adviser to sell two of its units, while Chevron issued a positive interim update. Treasuries are lower ahead of a reading on wholesale inventories, Europe ex-Greece is higher, and strong corporate news propelled Asian markets higher.

As of 8:43 a.m. ET, the June S&P 500 Index Globex future is 2 points above fair value, the Nasdaq 100 Index is 4 points above fair value, and the DJIA is 9 points above fair value. Crude oil is up $0.57 at $85.96 per barrel, and the Bloomberg gold spot price is up $5.00 at $1,155.55 per ounce. Elsewhere, the Dollar Index—a comparison of the US dollar to six major world currencies—is down 0.1% to 81.46.

The Wall Street Journal is reporting that 18 major banks have obscured the level of risk and debt on their balance sheets by temporarily decreasing debt levels immediately before reporting quarter-end results for the last five quarters, citing data from the Federal Reserve Bank of New York. The report highlights the use of short-term repurchase agreements, wherein the firms use cash from the loans to purchase securities, which are then used as collateral for other loans to buy yet more securities, boosting the bank’s leverage.

Dow member Chevron Corp (CVX $78) issued an interim update and indicated that its 1Q earnings are likely to be better than 4Q earnings, while not giving specific numbers, citing higher oil prices and a return to profitability in its refining and marketing business.

Reuters is reporting that Boston Scientific Corp (BSX $7) has hired an adviser to help sell its advanced-bionics and target-therapeutics units. BSX has declined to comment on the report.

Shares of Atlas Energy (ATLS $37) are sharply higher after Indian conglomerate Reliance Industries agreed to pay $1.7 billion, $340 million in cash and $1.36 billion in the form of a drilling carry, for a share of a joint venture in the Marcellus Shale natural gas field. Atlas will serve as the development operator for the venture, while Reliance will have the option to operate in certain project areas in coming years outside of Atlas’ core operating areas.

US economic data light

The economic calendar in the US is light today, with the lone release of wholesale inventories expected after the market opens, and the forecast is that inventories rose 0.4% in the month of February, after declining 0.2% in January. Treasuries are lower in early trading.

Europe gains as Greek concerns ease

Stocks in Europe are higher after posting steep losses yesterday on the changing winds coming out of Greece. Concerns yesterday about a default pushed the spread of the Greek 10-year bond over the German bund higher, peaking at 448 bps during the day, with the Greek 10-year yield reaching nearly 7.6%. Markets yesterday pared losses after European Central Bank (ECB) President Jean-Claude Trichet confirmed new collateral rules that would benefit Greece and said “A default is not an issue for Greece,” and today traders are taking cue from that remark to surmise that Greece could receive a bailout, possibly as soon as this weekend. However, Greek stocks pared an early 1.2% gain after the Greek Finance Minister said the country is still not planning on seeking emergency financing from EU countries.

Economic news was mixed in the region, as German exports rose faster than forecast, and posted their biggest increase in eight months, growing 5.1% month-over-month (m/m) in February, after falling 6.5% in January, and imports gained 0.2% m/m after a 5.6% rise the prior month, widening the trade surplus to 12.6 billion euros from 8 billion euros in January. Meanwhile, UK producer prices were much higher than expected, increasing 0.9% m/m, versus the 0.4% forecast, for a 5.0% year-over-year (y/y) increase, while core PPI grew 0.7% m/m and 3.6% y/y.

Britain’s FTSE 100 Index is 0.8% higher, France’s CAC-40 Index is up 1.2%, Germany’s DAX Index is advancing 0.9%, and Greece’s Athex Composite Index is down by 0.4%.

Asia falls on disappointing economic data

Markets in Asia rose as Greece concerns eased and on optimism about a global recovery after US retailers reported strong same-store sales yesterday, several Asian consumer names reported better-than-expected results, and on a report that China will increase investment in 3G mobile-phone services. In Japan, convenience store, supermarket and restaurant company Seven & I Holdings (SVNDY $50) rose after saying net income may more than double to 100 billion yen ($1.1 billion) in the year ending February 2011, and Fast Retailing (FRCOY $17), Japan’s largest retailer according to Bloomberg, raised its full-year net income forecast to 71 billion yen. The yen weakened as the euro rose as concerns in Greece eased, buoying shares of Japanese exporters, and the Japanese Nikkei 225 Index added 0.3%.

In China, phone and technology names rose on strong earnings from phone-equipment maker ZTE Corp (ZTCOF $6), as net income rose 52% and after the Shanghai Securities News reported that China will increase investment in 3G mobile-phone services to 400 billion yuan ($58.6 billion) by 2011, citing a statement jointly released by eight ministries, including the Ministry of Information Technology, and build 400,000 telecommunications stations, while expecting 150 million 3G mobile-phone users next year. Elsewhere, brewer Tsingtao Brewery Co (TSGTY $52) rose after reporting a 79% gain in full-year profit on increased demand and deep cost cuts. HSBC Holdings PLC (HBC $53) gained after the company said it increased its number of personal banking customers in China by 40% last year and its Chinese rural banking business is “ahead of our expectations.” The Shanghai Composite Index gained 0.9% and Hong Kong’s Hang Seng Index rose 1.6%.

Resource names in Australia were higher after Xstrata Plc (XSRAY $4) approached a “substantial” shareholder in Macarthur Coal Ltd (MACDF $13), joining New Hope Corp and Peabody Energy Corp (BTU $47) in a bidding war for the company, and after Rio Tinto PLC (RTP $243) joined an industry movement away from annual pricing for iron ore contracts to quarterly pricing. Australia’s S&P/ASX 200 Index added 0.2% and India’s BSE Sensex 30 Index increased 1.2%, while South Korea’s Kospi Index lost 0.5% after the Korean won strengthened.