Most stock indices ended more than 2% lower on Friday, as fresh concerns on an oil supply glut and China’s economic slowdown emerged. Iran had its nuclear sanctions lifted by the Western nations over the weekend, allowing the country to return to the oil export market and pledge to increase its production by 500,000 barrels per day.
WTI crude oil dipped below the $29/barrel level while Brent crude oil slipped below $30/barrel on Friday, triggering a new round of losses for financial markets. The Dow 30 index closed 390.97 points lower to 15,988.08 (-2.39%), the S&P 500 index was down 41.55 points to 1,880.29 (-2.16%), and the Nasdaq closed 126.6 points down to 4,488.4 (-2.74%).
US equity futures are slightly higher so far, with traders liquidating some of their short holdings and possibly pricing in a rebound sooner or later. Dow 30 index futures for March delivery are up 41.5 points to 15,953.5 (+0.41%), S&P 500 index futures for March delivery are up 3.75 points to 1,879.00 (+0.23%), and Nasdaq futures are up 13 points to 4,154.50 (+0.28%).
European stock indices were also deep in the red on Friday, with the German DAX down 248.93 points to 9,545.27 (-2.54%) and the French CAC 40 down 102.73 points to 4,210.16 (-2.38%). The London FTSE chalked up 114.13 points in losses to 5,804.10 (-2.67%).
Higher-yielders gap down on weekend, quick rebound
In the forex market, higher-yielding currencies opened lower against their lower-yielding counterparts but were quick to fill these weekend gaps. Similarly, Chinese markets started nearly 2% down for the day but are currently logging in some gains ahead of tomorrow’s data releases and the US bank holiday.
For now, China A50 index futures are up 325 points to 9,262.00 (+3.64%) and S&P ASX 200 futures up 40 points to 4,812.5 (+0.84%). Meanwhile, Hang Seng futures are down 177 points to 19,289.0 (-0.96%). The Nikkei 225 index is down 267.99 points to 16,882.98 (-1.54%) as of this writing, indicating that risk aversion is still in play this Monday.
There are no major event risks lined up for the rest of the day since US banks are closed for the holiday, but this low liquidity environment could inspire more volatile market price action. Chinese GDP and industrial production figures are up for release in the next Asian trading session, followed by UK CPI, German ZEW sentiment data, and New Zealand’s Global Dairy Trade auction.