Russell to open in the red

Small-cap shares are expected to open in the red Monday, weighed down by weekend news that Microsoft Corporation (Nasdaq:MSFT) has withdrawn an offer to takeover Yahoo! Inc. (Nasdaq:YHOO), which could dull some investor enthusiasm about the immediate future of merger and acquisition deals just days after the Mars/Wrigley (NYSE:WWY) deal stoked merger hype. In the immediate fallout of the news, Yahoo was down 15%, while Microsoft was up 2%.

The Russell 2000 (NYSE:IWM) was trading down about 0.4% in after-hours action, which would translate to a cash opening just below 723. Overseas stock markets were mixed to lower, with the European DJ Stoxx 50 down 0.4%, and Hong Kong’s Hang Seng down 0.2%. However, U.K. and Japan markets were closed for a holiday, so volume was lighter than usual.

The ISM Manufacturing Survey, which is arguably the largest economic report of the week, comes out this morning at 10:00 a.m. ET, and will likely help establish a trading direction for equities.

The dollar was down overnight against the euro and versus the yen, which also could weigh bullish psychology into this week’s action. Crude oil jumped . . .

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