Monday January 28th

28-01-2019

Dow set to fall 200 points at the open after Caterpillar slides on earnings miss

U.S. stock index futures pointed to a lower open on Monday after Caterpillar’s earnings disappointed investors. Dow Jones Industrial Average futures pulled back 193 points, indicating a decline of 200.20 points. S&P 500 and Nasdaq 100 futures also indicated a decline at the open. Caterpillar shares fell more than 5 percent after the industrial giant posted weaker-than-expected earnings for the fourth quarter. The company said its sales in the Asia/Pacific region declined because of lower demand in China. Caterpillar is considered a bellwether for global trade given the company’s exposure to overseas markets. The earnings miss comes as investors brace for the busiest week of the corporate reporting season. More than 100 S&P 500 companies are scheduled to report, including Apple, Amazon and Facebook. So far, the earnings season is off to a solid start. About 70 percent of the companies that have already reported have beaten analyst expectations, according to data from FactSet. On the data front, the monthly U.S. jobs report is scheduled for release later this week. Elsewhere, money managers are also waiting for another round of trade talks between China and the U.S., which are set to start later this week. The moves Monday also come after Congress and the Trump administration agreed to reopen the government for three weeks. The government had been shutdown for 35 days — the longest stoppage in U.S. history — as both sides could not agree on funding for a border wall. President Donald Trump told The Wall Street Journal on Sunday that another government shutdown is “certainly an option.” Major Asian stock markets closed lower on Monday following a turbulent trading session as investors waited for a new round of high-level U.S.-China trade talks, which is set to begin later in the week. The mainland Chinese markets, watched closely due to the ongoing trade war between Beijing and Washington, lost their early gains to close lower: The Shanghai composite shed about 0.18 percent to close at approximately 2,596.98 while the Shenzhen component ended its trading day slightly lower at around 7,589.58. The Shenzhen composite slipped 0.377 percent to close at 1,314.99. Hong Kong’s Hang Seng index was largely flat, as of its final hour of trading. In Japan, the Nikkei 225 slipped 0.60 percent to close at 20,649 while the Topix fell 0.68 percent to end its trading day at 1,555.51. South Korea’s Kospi closed largely flat at 2,177.30. Oil prices fell on Monday after U.S. companies added rigs for the first time this year, a signal that crude output may rise further, and as China, the world’s second-largest oil user, reported additional signs of an economic slowdown. The ongoing trade dispute between the United States and China looks unlikely to end any time soon and the impact of the dispute on the Chinese economy is increasing. International Brent crude oil futures were down $1.09, or 1.8 percent at $60.55 a barrel around 8:30 a.m. ET (1330 GMT). U.S. crude oil futures fell $1.08, or 2 percent, $52.61 per barrel. Gold edged lower on Monday as the dollar steadied, but the metal held above $1,300 as investors adopted a cautious approach while awaiting developments on the U.S.-China trade front and Federal Reserve policy. Spot gold eased 0.23 percent to $1,300.16 per ounce as of 7:18 a.m. ET, having risen earlier in the session to $1,304.42, its highest since June 14, 2018. The metal broke above $1,300 in the last session after failing to do so multiple times before. U.S. gold futures climbed 0.09 percent to $1,299.30 per ounce.