Tuesday February 2nd

2-02-2016

Dow futures down triple digits as oil, earnings weigh

U.S. stock index futures fell sharply on Tuesday, with Dow futures down more than 150 points in pre-market trade as declines in oil prices continued to weigh on investor sentiment. European stocks were down about 1.5 percent in morning trade ET as concerns over oil prices returned to haunt markets, with oil major BP reporting an annual loss of $6.5 billion in 2015, its worst in 20 years amid the persistently low oil price. The news sent shares 6 percent lower. Shares of Exxon Mobil fell more than 2 percent in pre-market trade after the firm reported a 58 percent drop in profit, hurt by low oil prices. The world's largest publicly traded oil company also said it would cut spending this year by one-quarter, Reuters reported. Oil prices fell on Tuesday, dented by worries about the demand outlook and rising supply, while hopes for a deal between OPEC and Russia on output cuts faded. Brent for April delivery held more than 4 percent lower near $32.70 a barrel, while West Texas Intermediate (WTI) futures were off more than $1, or 4 percent, just above $30 a barrel as of 8:44 a.m. ET. Other major earnings from UBS also dented confidence, as profits at the Swiss bank's wealth management arm fell sharply, pushing shares down as much as 7 percent. Back in the U.S., key earnings reports included UPS, Archer Daniels Midland, and Michael Kors, before market open. Gilead Sciences, Yahoo, Chipotle Mexican Grill, Equity Residential, IAC/InterActive and Match Group will all report after the bell. In a night of surprises, Texas Senator Ted Cruz rode a wave of strong evangelical support to a projected victory over national front-runner Donald Trump in the GOP's Iowa caucus, according to NBC News. On the other side of the race, Democratic candidate Hillary Clinton appeared to have won the Iowa caucus after her rival, Vermont Sen. Bernie Sanders, dubbed it "a virtual tie." "The fact (Donald) Trump came in second would probably be a positive in this marketplace but it is offset by the strong showing Bernie Sanders had. The worst case scenario would be coming out of New Hampshire with the two leaders Donald Trump and Bernie Sanders," said Art Hogan, chief market strategist at Wunderlich Securities. However, he said the market was more impacted by oil, as of early morning trade Tuesday. No major data releases are due Tuesday apart from light vehicle sales data for January. Asia markets closed mostly lower on Tuesday, weighed by declines in the energy sector as oil prices continued to tumble. Japan's Nikkei 225 lost 114.55 points, or 0.64 percent, to close down at 17,750.68, while South Korea's Kospi slipped 18.22 points, or 0.95 percent, to 1,906.60. Chinese markets bucked the broad trend and were mostly in positive territory, with the Shanghai composite closing up 61.59 points, or 2.29 percent, at 2,750.44, after two consecutive sessions of declines. The smaller Shenzhen composite finished 57.18 points, or 3.42 percent, higher at 1,729.08. But Hong Kong's Hang Seng index followed much of the rest of Asia to close down 148.66 points, or 0.76 percent, at 19,446.84. Gold steadied after touching a new three-month high on Tuesday, still supported as global growth concerns and a further drop in the oil price pushed investors towards safe-haven assets. Spot gold touched $1,130.11 an ounce, its strongest since Nov. 3, and then pulled back slightly to trade down 0.2 percent at $1,126.80 by 8:46 a.m. ET. A break above $1,136 could lift gold towards $1,157, a level reached in late October, ScotiaMocatta technical analysts said. U.S. gold for April delivery was off 0.1 percent at $1,127.10 an ounce.