Tuesday January 12th

12-01-2016

Dow futures up triple digits as oil, yuan stabilize

U.S. stock index futures pointed to a higher open on Tuesday, attempting further recovery from the sharply lower start to the year, as oil prices and the Chinese yuan stabilized. Dow futures traded about 150 points higher as of 8:32 a.m. ET. Both Brent crude futures and WTI crude traded above $31.50 a barrel. The U.S. dollar traded slightly higher against major world currencies, with the euro near $1.084 and the yen at 117.81 yen against the greenback. Overnight, the Chinese central bank set the yuan mid-point fix at 6.5628 against the dollar, similar to Monday's fix of 6.5626. "Maybe a little stability is (helping) to bring out some buyers in the context of an oversold market," said Peter Boockvar, chief market analyst at The Lindsey Group. He is watching whether the gains will be sustained throughout Tuesday's session, or attract selling. Stocks in Europe rebounded, trading more than 1.5 percent higher as oil prices recovered from session lows on Tuesday, while Chinese stocks closed slightly higher after wavering between gains and losses on Tuesday, following a sharp plunge Monday. "Global investors still remain firmly in risk-averse mode in the near-term as the market focuses switches back to the ongoing slide in the price of crude oil towards $30/barrel. The price of copper has also fallen to new cyclical lows, reinforcing investor concerns over the outlook for global growth," Lee Hardman, currency analyst at Bank of Tokyo-Mitsubishi, said in a report on Tuesday. Barclays Research said on Tuesday that it had lowered its 2016 average forecasts for both Brent and WTI to $37 in 2016, citing the marked deterioration in the commodities market environment since the start of the year. Earnings season began this week, with 11 S&P 500-listed companies and two Dow Jones industrial average components due to report by the end of Friday. The heavy part of the reporting season will begin on Tuesday next week and continue into the first week of February. On Tuesday, results are due from CSX Corporation after markets closes. Alcoa shares initially jumped in after-hours trading on Monday after it reported mixed quarterly results. The industry bellwether posted earnings of 4 cents per share, topping analysts' expectations. However, it fell just short of predictions on revenue, coming in at $5.25 billion. In other stock-related news, Starbucks said on Tuesday that it aimed to open 500 stores in China this year, despite the slowdown in the country that has hit some global retailers. Tuesday's economic data include the November JOLTS (job openings) report, plus this month's Federal Reserve's Beige Book, which tracks current economic conditions. There will also be the Treasury budget for December, plus the weekly MBA mortgage index and crude oil inventories. In addition, Richmond Federal Reserve President Jeffrey Lacker will speak on 2016's economic outlook in Columbia, South Carolina on Tuesday. The event will begin at 3 p.m. ET. Asia's major markets closed mostly lower, with the exception of China, as inhongvestor sentiment in the region remained fragile on the back of lower oil prices and China concerns. The Shanghai composite closed up by 6.48 points, or 0.21 percent, at 3,023.18 after rising as much as 0.9 percent and falling as much as 0.71 percent in the first 10 minutes of trade. On Monday, a late-afternoon sell-off saw the index fall more than 5 percent. In Japan, where markets resumed trading today after a day off on Monday, the Nikkei 225 finished 479 points, or 2.71 percent, lower at 17,218.96, with the mining sector down 5.55 percent and the oil and coal sector falling 5.21 percent. Crude oil stabilized Tuesday after earlier slipping toward $30 per barrel and hitting a 12-year low as heavy oversupply showed no sign of easing, while analysts scrambled to cut their price forecasts and traders bet on further declines. nternational benchmark Brent crude fell to a low of $30.43 per barrel, a level last seen in April 2004, before recovering to $31.64, up 9 cents, by 8:10 a.m. EDT (1310 GMT). It was earlier down for the seventh consecutive session, and has fallen every day of 2016 so far. U.S. crude West Texas Intermediate (WTI) fell to a low of $30.41 per barrel, a level last seen in December 2003, before crawling back to $31.47, up 6 cents. Gold fell for a third straight session on Tuesday as the dollar strengthened against a currency basket, and as a rebound in European stock markets undermined the metal's appeal as a haven from risk. An early January rally driven by a rout in global equities ran out of steam late last week after gold hit chart resistance at its 100-day moving average at $1,108 an ounce. Gains have been capped by concerns over higher U.S. interest rates. Spot gold was down 0.68 percent at $1,086.40 an ounce, while U.S. gold futures for February delivery were down $9.50 an ounce at $1,086.70.