Daily Stock Market Update: More Downside for Stocks and Commodities? – Jan 11, 2016

Daily Stock Market Update: More Downside for Stocks and Commodities? - Jan 11, 2016

Not even the upbeat non-farm payrolls report from the US was enough to keep equity indices afloat last week, as stocks chalked up their worst weekly open since records began. The Dow 30 index closed 167.65 points down to 16,346.45 (-1.02%), the S&P 500 index fell 21.06 points to 1,922.03 (-1.08%), and the Nasdaq was down 45.8 points to 4,643.6 (-0.98%).

Dow 30 index futures for March 2016 delivery are down 9.5 points to 16,225.0 (-0.06%), S&P 500 index futures are up 0.50 points to 1,912.00 (+0.03%), and Nasdaq futures are up 0.75 points to 4,262.50 (+0.05%). The S&P 500 VIX, which is considered a gauge of market uncertainty, is up 2.02 points to 27.01 (+8.08%) which means that risk aversion is in play.

The US economy added 292K jobs in December, stronger than the projected 203K pace of employment growth. Meanwhile the previous reports chalked up a total of 50K in upward revisions, keeping the unemployment rate steady at 5.0%. However, wage growth was absent as the average hourly earnings figure stayed flat instead of posting the projected 0.2% uptick.

Commodity futures facing more downside?

The risk-off market environment is still weighing on commodity prices, particularly after the Chinese CPI reading released over the weekend came in weaker than expected. The figure rose from 1.5% to 1.6%, lower than the projected 1.7% reading, while the index of producer prices hinted of sharper downside price pressures down the line.

WTI crude oil is down to $32.48/barrel (-2.04%) and Brent crude oil is down to $33.17/barrel (-1.12%). On the other hand, gold is up to $1,103.30 (+0.49%) per troy ounce while silver is up to $13.695 (+0.34%) per troy ounce.

Asia and Europe bracing for weaker open

Higher-yielding currencies gapped down against most of their safe-haven counterparts at the start of the trading week, signaling that markets may be poised for yet another weak open. Asian equity indices are currently in the red, as traders are reacting to the Chinese data while Japanese banks are closed for the holiday.

The China A50 index is down 177.34 points to 9,729.33 (-1.79%), the Hang Seng index is down 520.71 points to 19,933.00 (-2.55%), and the S&P ASX 200 index is down 67.94 points to 4,922.90 (-1.36%). Event risks for the week include US retail sales, the BOE monetary policy statement and meeting minutes, and data on US producer prices and consumer sentiment.