Will consumer spending spark stocks up?

U.S. stocks will open flat Monday as uncertainty surrounding energy markets remain intact, which is weighing on risk appetite. If the string of U.S. economic figures, including personal spending, come out better than expected stocks will go higher.

The S&P 500 index futures are currently unchanged ahead of the opening. Today the most important U.S. economic figure is personal spending, which is expected to show a 0.4 percent growth month-over-month compared to 0.7 percent in December. If consumer spending is coming in better than expected it will spark stocks higher as investors will see it as another sign that the U.S. economy is improving. For further analysis on U.S. consumer spending and the other economic releases read our Macro US update.

Source: Bloomberg (today's intraday on Euro STOXX 50 index futures)

In Europe the Euro STOXX 50 index futures are up 0.3 percent but have fluctuated between gains and losses throughout the session. In Europe Switzerland’s January retail sales month-over-month fell 0.1 percent compared to an expected gain of 0.7 percent. We also got January’s core consumer price index year-over-year for the Eurozone which showed an increase of 1.1 percent compared to 1.2 percent estimated by analysts. The figure shows that rising commodity prices are still not spilling over into core consumer prices in the Eurozone.

On earnings we have had two important releases:

• HSBC Holdings reported 2010 fiscal year net income of USD 13.2 billion compared to USD 13.7 billion expected. The miss was primarily due to higher than estimated operating expenses witnessed by the cost-income ratio that rose to 55.2 percent from 52.0 percent last year. At the same time, HSBC is lowering its profitability target for 2011. Investors are not pleased with the earnings release and are sending the shares down 4.6 percent.
• Hang Seng Bank reported fiscal year net income of HKD 14.9 billion compared to HKD 13.1 billion estimated by analysts due to higher fees and positive developments in bad loans.

On M&A, we have Equinox out announcing a hostile takeover bid for Lundin Mining for about CAD 4.8 billion in a cash and share deal. Lundin Mining shares are currently up 17.5 percent in Stockholm trading. Ventas announced it will buy Nationwide Health Properties for USD 7.4 billion with NHP shareholders to receive 0.7866 Ventas shares for each share of NHP common stock.