Daily Market Analysis

This looks easy. Now we have to see whether it's really sustainable.

Market Moving Factors:
• Risk trade returns
• AT&T acquires T-Mobile in $39 billion deal
• Citigroup announces reverse split and intent to reinstate dividend
• Existing home sales for February come short of consensus forecast


• Asian Markets Close: Nikkei CLOSED; Hang Seng +1.7%; Shanghai +0.1; Sensex -0.2%

Although Japan was closed, most of the attention was centered around its developments. For the most part, the weekend passed without further incident, and power has now been restored to all 6 of the reactors at Fukushima Daini Nuclear Power Station. The markets are finding relief in this, and as such, are trading higher across the board. Worth noting, black smoke was reported coming out of reactor #3. There were no reports of why, and no explosion was reported thus far. It has since dissipated. Moody's made some comments indicating that there is increased downside risk to Japan, perhaps signalling a ratings move.

In China, a major bank speculated that the PBOC would raise interest rates next month and sees inflation peaking in 1H11. Looking at currencies the yen is weaker to 81.00...the yuan is little changed to 6.5645.

In Japan, as mentioned above, the markets were closed for its Equinox public holiday.

In Hong Kong, the Hang Seng finished +1.7% with energy stocks gaining ground on the strong overnight move in crude. CNOOC and PetroChina both posted gains over 3%. The Red Chip Index closed up 2.4% while H-shares finished 1.8% higher. In China, the Shanghai closed little changed, up 0.1% the market had its first chance to respond to the PBOC's RRR hike on Friday.

In India, the Sensex finished down 0.2% with only 13 stocks finishing in positive territory. The heavily weighted Reliance Industries and Infosys both finished in negative territory.


• European Markets Closing Prices
UK's FTSE: +1.2%
Germany's DAX: +2.3%
France's CAC: +2.5%
Spain's IBEX: +2.4%
Portugal's PSI: +1.5%

Market Internals for Monday 21 March, 2011 AMC

NYSE : Lower than avg volume @ 1001 mln, vs. 1033 mln
Advancers outpaced Decliners (adv/dec): 2458/547
New highs outpaced new lows (hi/lo): 129/11

NASDAQ : Higher than avg volume @ 2048 mln, vs. 1810 mln
Advancers outpaced Decliners (adv/dec): 2048/574
New highs outpaced new lows (hi/lo): 88/28


Treasury Yields AMC on Monday 21 March, 2011:
• 2 Year Note 0.67% +0.06
• 5 Year Note 2.04% +0.08
• 10 Year Note 3.34% +0.06
• 30 Year Bond 4.45% +0.02
2/30 Spread : 378bps (-4) ... 2/10 Spread : 267bps (unch)

Economic Events 10:00 am FHFA Housing Price Index

Conferences and Shareholder/Analyst Meetings of Interest
- GT Investor Meeting
- DAL, LUV, UAL at JP Morgan Aviation, Transportation and Defense Conference
- Fed's Pianalto

SUMMARY

With little on the economic front and Japan on the mend, Libya is the only concern but war has always been a reason to be bullish in the U.S. I am staying with the trend. Should there be any ratings move on Japan, it might affect the gains it has had for the past few days.