Monday December 7th

7-12-2015

Futures mostly lower as oil slide weighs

U.S. stock index futures pointed to a mostly lower open Monday amid a decline in oil prices. Equities surged Friday following the strong jobs report, which supports an interest rate hike this month, and dovish comments from the European Central Bank. Brent crude fell to a more than six-and-a-half-year low Monday after the Organization of the Petroleum Exporting Countries failed to agree on a production curb to stem sliding prices and a stronger dollar made holding crude positions more expensive. Brent crude, the globally traded benchmark, fell 80 cents to $42.20 a barrel on Monday, below the previous 2015 low of $42.23. U.S. crude was trading at $38.85 a barrel, down $1.15, as of 8:43 a.m., ET. The U.S. dollar index traded about half a percent higher against major world currencies near 98.80. The euro traded near $1.08. Ahead of next week's key Fed policy announcement — which seems bound to bring the first hike in the fed funds rate since 2006 — it also looks set to be a less eventful week, kicking off with just consumer credit figures for October at 3:00 p.m. ET on Monday. Arguably the week's U.S. data highlights come on Friday, with November retail sales figures, which are expected to report a further modest increase, as well as the preliminary reading of the University of Michigan's consumer sentiment survey for December. Atlanta Fed President Dennis Lockhart said on CNBC's "Squawk Box" Monday that economic conditions are satisfactory and the financial markets are well-prepared for the Federal Reserve to increase interest rates next week. St. Louis Fed President James Bullard is the only Fed official scheduled on the calendar with a speech Monday. The Fed goes quiet in the week before its rates meeting. Markets are prepping for a rate hike December 16, after Friday's 211,000 November nonfarm payrolls showed a continuing solid trend of job creation. "The imminent start of the Fed rate-hiking cycle will be sugar-coated in dovish reassurances about the speed of tightening. The market expects as much, but history warns us that the dollar rallies ahead of the first rate hike and often weakens afterwards. This presents a chance to buy, as monetary policy divergence will still be the big theme of 2016," said analysts led by Patrick Legland, global head of research at Societe Generale. European Central Bank President Mario Draghi said quantitative easing was unlimited on Friday, helping stocks close around 2 percent higher. "There is no particular limit to how we can deploy any of our tools," he said. His comments, made in New York came after markets were disappointed by the ECB on Thursday following its monthly policy meeting, where it pledged to extend its bond-buying program, but fell short of expectations of greater stimulus. European equities were trading higher on Monday after Draghi's dovish tone and the solid jobs report from the U.S, with French and German stocks both trading close to 2 percent higher. Asian stocks lost much of their gains from the morning session to close mixed on Monday, as investors eye a host of economic data due this week. The Shanghai Composite index closed up 12 points or 0.34 percent at 3,536. The smaller Shenzhen Composite ended 28 points or 1.2 percent higher at 2,261. Away from the mainland, Hong Kong's Hang Seng index traded up 28 points or 0.12 percent at 22,263. The Japanese market closed in positive territory as investors await the latest update of third quarter gross domestic product (GDP) data, the broadest measure of economic health, and machinery orders figures. The Nikkei 225 was up 194 points or 1 percent at 19,698 while the Topix closed up 11 points or 0.71 percent higher at 1,585. Gold retreated on Monday from a three-week high after the dollar was lifted by upbeat U.S. jobs data from Friday that reinforced the view the U.S. Federal Reserve will raise interest rates next week. A short-covering rally had swept the precious metal higher after the jobs data, which at first failed to lift the dollar significantly. Gold ended Friday up 2.3 percent, its biggest one-day rally since January, but failed to hold those gains. Spot gold was down 0.4 percent at $1,082.09 an ounce at 1246 GMT, while U.S. gold futures for February delivery were down $2.30 an ounce at $1,081.80. On Friday, it touched its highest since Nov. 16 at $1,088.70