Monday January 14th

14-01-2019

Dow is set to drop more than 200 points as earnings season kicks off

U.S. stock index futures fell on Monday as investors awaited the start of the corporate earnings season. Concerns over an economic slowdown in China also dampened sentiment to start off the week. At around 6:55 a.m. ET, Dow Jones Industrial Average futures indicated a decline of more than 200 points at the open. Futures on the S&P 500 and Nasdaq 100 were also down. Citigroup is scheduled to report its calendar fourth-quarter results later on Monday morning. Other major banks like J.P. Morgan Chase, Bank of America, Goldman Sachs and Wells Fargo expected to release their quarterly numbers. Corporate profits grew massively in the first three quarters of last year, expanding by at least 25 percent in those time periods. S&P 500 earnings are expected to have grown by 12.6 percent in the fourth quarter, according to Lindsey Bell, a strategist at CFRA Research. Earnings growth will be harder to come by in 2019, however, said David Kostin, chief U.S. equity strategist at Goldman Sachs. In a note to clients this weekend, Kostin said 2019 earnings growth could be as low as 3 percent as the economy slows, the dollar rises in value and oil prices remain low. Investors were also worries after fresh data out on Monday showed December exports and imports dropping unexpectedly in China. These figures deepened concerns of a slowdown in the world’s second-largest economy. Furthermore, the divisions between Democrats and Republicans over a border wall continue, meaning there is no end in sight for the re-opening of the U.S. government. Republican Senator Lindsey Graham urged the president on Sunday to reopen the government for a limited period to try to get talks going again. Asia Pacific markets started off the trading week mostly on the back foot as China’s disappointing trade data spooked investors. Major indexes in South Korea, China, Hong Kong and Singapore tumbled Monday afternoon. The market in Japan is closed for a public holiday. The Shanghai composite slipped about 0.7 percent to 2,535.77. The Shenzhen composite declined 0.73 percent to 1,303.75, while the Shenzhen component index fell around 0.86 percent to 7,409.19. In South Korea, the Kospi declined about 11.05 points, or 0.53 percent, to 2,064.52 as some of the tech names struggled. Hong Kong’s Hang Seng Index was down 1.57 percent while Singapore’s Straits Times Index fell 0.53 percent. Oil slipped to around $60 a barrel on Monday after data showed weakening imports and exports in China, the world’s second-largest oil consumer, raising the prospect of a slowdown in fuel demand. China’s exports fell by the most in two years in December while imports contracted, official figures showed, pointing to further weakness in what is also the world’s second-largest economy. Brent crude, the international benchmark, fell 50 cents to $59.98 a barrel by 0932 GMT, trading as low as $59.37 intraday. U.S. crude slipped 41 cents to $51.18. Gold prices rose on Monday as investors sought safety as equities slipped after weak Chinese trade data dented risk sentiment and rekindled fears of a global economic slowdown. Spot gold rose 0.53 percent to $1,294.95 per ounce by 7:23 a.m. ET, while U.S. gold futures were up 0.4 percent at $1,294.70 per ounce.