Japan, Italy hopes drive gains for stock futures

Barnes & Noble chairman said to eye consumer-chain buyout

NEW YORK (MarketWatch) — U.S. stock futures on Monday pointed to a higher start for Wall Street, with global markets rallying on speculation that Japan will appoint a pro-stimulus central bank governor and hopes Italian elections won’t have a dramatic conclusion.

Europe and Asia stocks took off Monday. Reports that Asian Development Bank chief Haruhiko Kuroda could be the next governor of the Bank of Japan were a big driver. There were also reports Kikuo Iwata will be one of his two deputy governors, and both Iwata and Kuroda are viewed as pro-stimulus. Read: Kuroda to be Bank of Japan head: reports.

“The equity market is being driven by positive anticipation on Italian elections and the choice of Japanese academic Kikuo Iwata, an advocate of unorthodox monetary easing steps to beat deflation, to think that the BOJ will continue his policy of monetary easing,” said David Thebault, head of quantitative sales trading at Global Equities.

“That’s pushing investors to buy stocks and sell yen currency/buy euro.” he said in emailed comments.

Deadline for spending cuts looms

Atlanta Federal Reserve President Dennis Lockhart, who isn’t a voting member of the Federal Reserve’s policy-making Open Market Committee, will speak at 7 p.m. U.S. Eastern on Monday about the economic outlook.

Semiannual monetary-policy testimony to Congress by Fed Chairman Ben Bernanke Tuesday and Wednesday is a big market event for the week. History shows the S&P 500 has finished higher nine out of 12 times during the two-day period in which the Fed chair has answered questions. Read: Bernanke bump: Stocks tend to rally on testimony.

“There’s a vote scheduled for tomorrow, but even if investors are willing to accept that the U.S. won’t shut down immediately should the sequestration apply, at these levels it would be little surprise if something like this wasn’t to end up as a catalyst for some notable profit-taking,” said Fawad Razaqzada, market strategist at GFT Markets, in a note.

U.S. stocks rallied on Friday, though the Standard & Poor’s 500 index snapped a seven-week winning streak, following a couple of rough sessions. Analysts are keeping a close eye out for a shorter-term correction, given Wall Street’s strong run this year. See: Friday's Market Snapshot.

A woman walks past election campaign posters of PDL (People of Freedom) member Silvio Berlusconi in Milan, February 21, 2013.

Italy elections loom

Italian election polls close at 9 a.m. Eastern on Monday. The vote is being seen as a referendum on the austerity and reform program of Prime Minister Mario Monti, and there are some concerns as to what a strong showing by former premier Silvio Berlusconi could mean for the markets. Read: Can Silvio Berlusconi dent the global stock rally?

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