The Day Ahead: Equity Futures Rebound Ahead of Housing Data

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Equity markets are looking for a positive open this morning after a final hour sell-off brought the benchmark S&P 500 down by almost 19 points yesterday. 

Meanwhile, overseas markets continue to suffer, with stocks in England and Japan each down by more than 1%.

Overnight, Japanese Prime Minister Yukio Hatoyama resigned after less than nine months in office. His second-in-command, Ichiro Ozawaamidst, also resigned, in the hopes of bolstering the Democratic Party’s chances of staying in power after next month’s elections.

The party’s popularity has suffered during a period of economic stagnation. Hatoyama was also involved in a political funding scandal. After the news, the yen fell more than 1% against every major currency.

“A public opinion survey published in the 31 May Nikkei showed that support for the cabinet had plunged to 22%, from 75% when the administration took office,” said economists at Nomura Global Economics. “We think Hatoyama's decision may also reflect indications that the ruling parties could struggle in the upcoming Upper House election.”

Ninety minutes before the opening bell, Dow futures are up 47 points to 10,066 and S&P 500 futures are up 5.25 points to 1,074.75. The 2-year Treasury note yield is up 1.2 basis points at 0.782% while the benchmark 10-year note yield is up 2.4 basis points at 3.285%.

Crude oil futures are up 0.20 at 72.78 while Gold is off 4.80 to $1,220.0.

Key Events Today:

10:00 ― The Pending Home Sales Index rose 5.3% in March and 8.3% in February. The strength could continue in April as the last-minute homebuyers jumped into the market before the government tax-credit expired at the end of the month. The bigger question is how sales hold up the following month.

A consensus expectation was not available, but economists at BMO look for the index to increase 5.0% in April.

“Like all housing indicators these days, the data are benefiting from the rush to purchase new and existing homes ahead of the expiry of the tax credit,” they added.

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