Citi Stake Reports Buoy Futures
US stock index futures pointed to a higher open Monday as shares of Citigroup gained following reports the government could up its stake in the Wall Street giant.
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US taxpayers could soon own up to 40 percent of Citi’s common stock, a source told the Wall Street Journal. The unconfirmed plan would leave Citi’s existing shareholders with diluted holdings and the government would have a greater influence on the bank.
Citi was up 18 percent in active premarket trading, though off its earlier gains of nearly 40 percent, as investors grew more confident that the government was not looking to nationalize the institution. Other banks also were gaining after the White House said it would ensure that the system would have adequate capital to provide liquidity for economic growth.
JPMorgan Chase shares gained 1.8 percent, while battered Bank of America stock rose about 0.5 percent.
Stocks closed lower on Friday, but managed to avoid the major selloff that many analysts had feared after the Dow skidded below its November lows.
Also in the banking sector, in Europe Royal Bank of Scotland is to announce a restructuring this week to create a non-core division into which unwanted assets will be placed, according to a banking industry source. RBS shares were 15 percent up in mid-morning trade.
Domestically traded shares of RBS surged 14 percent premarket.
President Obama will attempt to address some of the concerns over the state of the economy as he delivers his budget this week. Aside from the economic crisis, health care and the budget deficit will also be on the president’s agenda.
Meanwhile, the future of General Motors and Chrysler remained under discussion as outside advisers to the Treasury sought contingency financing options for the automakers.
Shares of Palm gained nearly 7 percent after Deutsche Bank upgraded the smartphone maker to buy from hold.
Dow component AT&T saw its shares gain 1.5 percent after it said it would invest $1 billion this year to expand its global telecommunications network.
And Atlanta Federal Reserve President Dennis Lockhart will speak on the economic outlook at 12:40 pm New York time at Champion Lakes, Florida.
The biggest night on movie-makers’ calendar saw British success with Slumdog Millionaire bagging eight Oscars on Sunday. Kate Winslet won best actress and Sean Penn best actor.