Monday December 14th

14-12-2015

Futures try for gains; oil, Fed in focus

U.S. stock index futures indicated a flat to slightly higher open Monday despite a fresh multi-year low in oil as investors awaited this week's Federal Reserve meeting. The central bank is expected to make its first interest rate rise in more than nine years. Stock index futures traded mostly higher after earlier giving up gains as brent and U.S. crude oil prices fell sharply on Monday, with crude falling below $35 a barrel for the first time since February 2009. European stocks traded mostly lower, while Asia ended mixed with only the Shanghai composite ending higher, up about 2.5 percent. The Nikkei 225 benchmark ended 347 points, or 1.8 percent, lower at 18,883, and the Topix closed down 22 points, or 1.4 percent, at 1,527 despite a better-than-expected quarterly Tankan Survey, a broad measure of business sentiment, released by the Bank of Japan before the market open. "No prizes for guessing the main event of the coming week, as the conclusion of the Fed's FOMC meeting on Wednesday is widely expected to bring lift-off for the fed funds rate, with the likely 25 basis point hike to 0.25-0.50 percent set to be the first increase since 2006," Chris Scicluna, head of economic research at Daiwa Capital Markets, said in a research note on Monday. "Expectations, however, are for a 'dovish tightening', with the post-meeting statement and updated economic forecasts set to signal the likelihood of a slow pace of further hikes going forward and relatively low interest rates for some time to come," he said. No major economic data is expected from the U.S, with VeriFone among the few major U.S. companies posting earnings on Monday. Its quarterly numbers are due after the market close. Treasury yields were mostly higher, while the U.S. dollar pared gains against major world currencies. Earlier, the greenback gained against Asian currencies, particularly the yuan after the People's Bank of China said it had begun tracking the currency against a basket of other currencies.  Activist investor, Daniel Loeb, has called for Dow Chemical to remove its chief executive, Andrew Liveris, according to the Wall Street Journal. Twitter has issued its first warning about a potential hack by government-backed groups, as cybersecurity remains a major concern for companies and states alike. Plus, Australia's federal court has said that Reckitt Benckiser had misled consumers over the pain-killing qualities of Nurofen. Crude oil futures fell for a seventh straight session on Monday, their longest losing streak since mid-2014, on growing fears that the global oil glut would worsen in the months to come in a pricing wars between key producers. Brent crude fell below $38 a barrel for the first time since December 2008 on Friday and U.S. crude, West Texas Intermediate (WTI), sank below $35 a barrel for the first time since February 2009. Front month WTI was down 88 cents at $34.74 a barrel, while Brent was down $1.40 to $36.92 a barrel. Gold fell on Monday as the dollar edged up ahead of a Federal Reserve policy meeting this week, which is expected to announce the first interest rate rise in nearly a decade. Investors have been cutting gold positions in anticipation of a rate increase and the metal has fallen about 9 percent so far this year. Higher rates could dent demand for the non-interest paying asset, while also boosting the dollar. Spot gold eased 0.6 percent to $1,067.87 an ounce, while U.S. gold futures were down 0.8 percent at $1,067.30 an ounce.