Friday January 15th

15-01-2016

Dow futures briefly plunge 400 after data; 10-yr yield dips below 2%

U.S. stock index futures indicated a sharply lower open on Friday after disappointing U.S. data and the Chinese stock market and crude prices plunged. Dow futures briefly fell more than 400 points after retail sales declined 0.1 percent in December. Ex-autos, retail sales also fell 0.1 percent. The Producer Price Index fell 0.2 percent in December after rising 0.3 percent in November. January Empire manufacturing was minus 19.4. Treasury yields fell, with the 10-year yield dipping below 2 percent and the 2-year yield near 0.83 percent. The U.S. dollar index traded about 0.4 percent lower, with the euro at $1.09 and the yen at 116.81 yen against the greenback, as of 8:37 a.m. ET. The Shanghai composite fell 3.51 percent and entered bear market territory, while Brent and WTI futures both held below $30 a barrel, down about 5 percent each. The pan-European STOXX 600 index fell nearly 2 percent. The blue chips index was also dragged down by falls in Intel, Apple and Goldman Sachs. Intel reported better-than-expected earnings Thursday, but the stock is down about 6 percent in the premarket on Friday. Traders also looked to a speech from New York Federal Reserve President William Dudley. Dudley said that future rate hikes depend on data and that rates are set to continue on gradual upward path. Industrial production and capacity utilization are scheduled to be released at 9:15 a.m., while consumer sentiment and business inventories are set to come out at 10:00 a.m. Major Asian stock markets ended down Friday, erasing early gains despite a positive finish from Wall Street overnight. Japan's Nikkei 225, which was initially up by as much as 1.77 percent, fell into negative territory, finishing 93.84 points, or 0.54 percent, lower at 17,147.11. On Thursday, the Nikkei lost 2.68 percent. In total, the Nikkei has lost 9.91 percent since the last trading day of 2015. Brent crude futures plunged more than 5 percent to near 12-year lows on Friday as the market braced for increased Iranian oil exports, with the lifting of international sanctions possible within days. Brent and U.S. crude oil were on track to close lower for a third consecutive week, down roughly 20 percent from their 2016 highs. The International Atomic Energy Agency (IAEA) could issue its report on Iran's compliance with an agreement to curb its nuclear program during a Friday meeting in Vienna, potentially triggering the lifting of Western sanctions. U.S. crude futures were down $1.68, or 5.4 percent lower at $29.52 per barrel at 8:39 a.m. EDT (1339 GMT), after posting the first significant gains for 2016 in the previous session. The contract hit a 12-year low of $29.33 in earlier trading. The March Brent contract was down $1.34, or 4.3 percent, at $29.54 a barrel. Earlier on Friday, it fell to $29.30. Gold edged higher on Friday, after dropping for the past four out of five sessions, as falling Asian stock markets underpinned the precious metal although gains were capped by expectations of another U.S. interest rate increase. Spot gold added 1.15 percent to $1,089.96 an ounce, while U.S. gold futures gained about 1.55 percent to $1,090.20.