(RTTNews) - With traders reacting to news of additional government actions designed to stem the recent credit crisis, the U.S. stock markets are likely to see significant strength in early trading on Monday. The major index futures are currently indicating a sharply higher open for the markets.

The upward momentum comes as leading central banks across the globe announced additional measures to provide broad access to liquidity and funding to financial institutions. The news is likely to inspire some bargain hunting following recent weakness.

The Federal Reserve along with the Bank of England, the European Central Bank, the Bank of Japan and the Swiss National Bank promised to inject unlimited amounts of cash to unfreeze credit. This is the latest in a string of coordinated measures by world central banks to tackle the fast spreading global financial market crisis.

Additionally, Treasury Secretary Henry Paulson confirmed over the weekend that he is considering plans for the U.S. government to invest in banks, the first such measure since the 1930s. Paulson says that the recently passed $700 billion rescue package gives the Treasury Department authority to inject fresh capital in the system in order to thaw frozen credit markets.

Meanwhile, the Group of Seven finance ministers signed a one-page statement pledging to work together to stabilize the markets. There were no specific proposals included in the statement, but the G7 expressed support for plans to partially nationalize a number of banks in the U.K. and U.S.

In other news, Japanese bank Mitsubishi UFJ Financial Group announced that is has implemented the strategic and capital alliance with Morgan Stanley (MS) that was announced in late September. MUFG has subsequently invested $9 billion to acquire 21 percent of the voting rights of Morgan Stanley.

Under the terms of the revised agreement, MUFG will receive $7.8 billion in convertible preferred stock with a conversion price of $25.25 per share. The company will also receive $1.2 billion in non-convertible preferred stock.

Additionally, Wells Fargo (WFC) said that the Federal Reserve has approved its acquisition of Wachovia (WB) including all its subsidiaries. The acquisition, which still requires the approval of Wachovia shareholders, is on schedule to be completed by the end of this year.

Financial stocks could subsequently see significant strength after falling sharply in recent sessions. Nonetheless, some traders may be reluctant to buy financial stocks amid lingering concerns about the outlook for the global economy

Among individual stocks, shares of Sovereign Bancorp (SOV) are likely to see early strength after Spanish bank Banco Santander (STD) confirmed reports that it is in conversations regarding an acquisition of Sovereign Bancorp.

Meanwhile, shares of Affymetrix (AFFX) are under pressure in pre-market trading after the biotechnology company said it expects third quarter revenue of approximately $75 million compared to analyst estimates of about $90.1 million.

Stocks experienced another volatile trading session on Friday, as traders continued to express concerns about the outlook for the global economy as a result of the current credit crisis. The major averages showed big swings throughout the session, eventually ending the day mixed.

Benefiting from a late-day rally, the tech-heavy Nasdaq ended the session up 0.3 percent. On the other hand, the Dow and the S&P 500 slid back into the red going into the close, closing down 1.5 percent and 1.2 percent, respectively.

Nonetheless, the major averages all posted substantial losses for the week, with the Dow and the S&P 500 setting new five-year closing lows. The Dow and the S&P 500 both posted weekly losses of 18.2 percent, while the Nasdaq fell 15.3 percent for the week.

After falling sharply last week, crude oil futures are recovering and are currently trading up $4.20 at $81.90 a barrel. The price of a barrel of oil tumbled $16.18 or 17.2 percent to $77.70 in the previous week.

Meanwhile, gold futures are currently trading down $3.00 at $856.00 an ounce. The price of gold showed a notable upward move last week, rising more than $25 an ounce, although it was well off its high for the week following a steep decline on Friday.

On the currency front, the dollar turned in a mixed performance in the week ended October 10th. While the greenback lost 4.4 percent against the yen, it rose 2.6 percent against the euro. Currently, the dollar is trading at 100.395 yen and is worth $1.3664 versus the euro.

In overseas trading, most of the major Asian markets advanced in Monday’s session, with the positive sentiment arising out of reassuring actions and comments from the respective governments. The Japanese market remained closed on account of a public holiday.

The major European markets are also trading higher after the European Union agreed to underwrite interbank lending. The French CAC 40 Index and the German DAX Index are rising 6.6 percent and 7.5 percent, respectively, while the U.K.’s FTSE 100 Index is up 4.2 percent.

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Posted in Categories: Economy, Eurozone, Japan, Releases, Switzerland, UK, USA.

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