Market Update: Global Equity Markets Slide

market volatility

Financial and Economic News Update

Global equity markets slide: Stock markets around the globe lost in trade today as orders for U.S. durable goods unexpectedly fell in December. The Commerce Department said today that orders for durable goods declined 3.4 percent in December, following a 2.1 percent drop the month before. In other economic news, the S&P/Case-Shiller National Home Price Index showed that U.S. home prices rose lower than expected in November. Before the opening bell, Pfizer Inc. (NYSE:PFE) reported stronger than expected results, but warned that 2015 earnings would come in below projections. After the close of trading, Apple Inc. (NASDAQ:AAPL) and Yahoo! Inc. (NASDAQ:YHOO) will post their quarterly numbers.

Oil prices rally: Brent crude oil prices recovered from early morning lows to remain steady above the $48-mark. However, trading volume is expected to be low as the snow storm disrupts transport in New York. Prices have plunged nearly 60 percent since June 2014 on strong global supplies, and a weakened demand. Traders will closely watch data on U.S. commercial crude stockpiles, which analysts expect to have risen nearly 4 million barrels last week.

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Gold below 5-month low: Gold is struggling to recover losses suffered in the prior two sessions as strength in equity markets lowered the metals appeal as a hedge. Analysts expect bullion to consolidate in the near-term after the early-year rise. Immediate support stands at $1272, while any fresh bout of buying could take gold to $1309, which is the high from January 22.

Euro up against the dollar: The euro gained against the dollar for the second straight session as traders and investors eagerly await the start of a key Fed meeting for clues on when the central bank may raise interest rates. The euro yesterday fell to an 11-year trough after Greece voted in the anti-austerity Syriza party. But concerns eased following sings that party leader Alexis Tsipras is willing to negotiate with international creditors

Bond Market News

Treasury 30-year yields near record lows: U.S. 30-year yield was close to its lowest recorded level amid growing market speculation that the Federal Reserve will keep interest rates unchanged. Analysts expect the slowdown in the global economy, and a falling inflation, to push yields even lower, at least in the short-term. The Federal Reserve’s policy-setting board will meet for the first time this year on Wednesday, but any rate hike could be expected only by the middle of the year.

U.K. government bonds advance after economy grew less than expected: U.K. government bonds rose following data that showed that the domestic economy grew at its slowest pace in a year. The U.K. economy expanded by 0.5 percent in the fourth quarter, after growing 0.7 percent in the previous quarter, three months through September, the Office for National Statistics said today. Analysts were expecting a figure of 0.6 percent. In separate news, the U.K. Debt Management Office is planning to sell inflation-linked gilts due in March 2058 on Wednesday, according to a Bloomberg report.

China’s money market rate drops: Chinese benchmark money-market rate dipped after the People’s Bank of China infused funds into the financial system to meet the increased demand for cash, ahead of the Lunar New Year holidays that start on February 18. The central bank concluded 60 billion yuan ($9.62 billion) of reverse-repurchase operations for 7-day and 28-day contracts on Tuesday. The PBOC offered 30 billion yuan of 7-day contracts at 3.85 percent, and a similar amount of 28-day reverse repos at 4.8 percent.

S&P slashes Russia’s foreign currency credit rating to junk; sending bonds lower for the second consecutive day: Standard & Poor’s cut Russia’s foreign currency credit rating to junk for the first time in a decade, as the economy grapples with international sanctions, and the big fall in oil prices. Russia is the world’s largest energy exporter, and the almost 50 percent drop in oil prices has left the left the country in a severe currency crisis. The international sanctions have also dried up corporate borrowing avenues, and driven the economy to the brink of a recession.

Oil producer Afren likely to delay coupon payment: Afren Plc (LON:AFR) may delay a $15 million coupon payment next week, as the recent slump in oil prices has left bonds sold by most European oil operators in increasing distress. The company, which had net debt of $720 million as of June last year, is in talks with major bondholders over its liquidity and funding needs.

Market Levels

  • US: Dow Futures: 17340.00 (-1.56%), S&P 500 Futures: 2030.25 (-1.13%), NASDAQ Futures: 4212.25 (-1.34%)
  • Europe: CAC: 4601.41 (-1.49%), DAX: 10632.42 (-1.50%), FTSE: 6792.15 (-0.88%).
  • Metals: Gold: 1281.50 (0.18%), Silver: 17.945 (-0.21%), Copper: 2.5121 (-1.30%)
  • Energy: U.S. Crude: 45.49 (0.86%), Brent Crude: 48.60 (0.85%), Natural Gas: 2.953 (2.50%)
  • Commodities: Corn: 3.902 (0.58%), Soya Bean: 9.910 (0.76%), Wheat: 5.417 (0.93%)
  • Currency: EUR/USD: 1.1306 (0.38%), GBP/USD: 1.5131 (0.22%), USD/JPY: 117.7400 (-0.62%)
  • 10-year US Treasury: 1.8147% (-0.003), German 10-Year Yield: 0.387% (0.02), Japanese 10-Year Yield: 0.226% (0.000)

Economic Calendar for Tuesday, January 27, 2015:

08:30 A.M. ET: Durable Goods Orders (December)
08:55 A.M. ET: Redbook Index (MoM) (January 16)
09:00 A.M. ET: S&P/Case-Shiller Home Price Indices (YoY) (November)
09:45 A.M. ET: Markit Services PMI (January)
09:45 A.M. ET: Markit PMI Composite (January)
10:00 A.M. ET: Consumer Confidence (January)
10:00 A.M. ET: New Home Sales (MoM) (December)
10:00 A.M. ET: Richmond Fed Manufacturing Index (January)
10:00 A.M. ET: State Street Investor Confidence Index (January)

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Abhijit Sen

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