Monday January 29th

29-01-2018

US futures point to a negative open as yields rise

U.S. stock index futures were trading lower ahead of Monday's open, as investors paused for breath, after Wall Street posted sharp gains in the previous session. Investors also paid attention to rising interest rates. Dow Jones industrial average futures fell 37 points, while S&P 500 and Nasdaq 100 futures declined 5.75 points and 14.75 points, respectively. On Friday, U.S. stocks finished sharply higher, on the back of better-than-expected earnings results. The Dow Jones industrial average rose more than 200 points — hitting both intraday and closing records, while other indexes closed higher. Wall Street also looked to the sovereign bonds market, as the benchmark 10-year yield broke above 2.7 percent. "That, combined with short term profit taking following Friday's melt up in stocks, is weighing on futures," said Tom Essaye, founder of The Sevens Report. Switching to Monday, in the corporate sphere, Lockheed Martin and Seagate Technology reported better-than-expected earnings and revenue. On the data front, personal income rose 0.4 percent in December, more than the expected 0.3 percent increase. In politics, the U.S. administration's security team is reportedly looking at options where the government could occupy part of the nation's mobile network, in order to protect itself from China, Axios reported. Citing sensitive documents that it had acquired, Axios stated that two routes were up for discussion: building a single, super-fast mobile network that it could then rent access to national carriers, or wireless U.S.-based providers could establish their own 5G networks that would compete with each other. Oil prices were under pressure Monday, while investors were paying close attention to the U.S. dollar, as it rose against a basket of currencies. Brent crude oil prices eased below $70 a barrel on Monday as rising U.S. output undermined efforts led by OPEC and Russia to tighten supplies, but prices were still on track for their strongest start to the year in five years. Brent crude futures were down 60 cents at $69.92 a barrel by 7:51 a.m. ET (1251 GMT), while U.S. West Texas Intermediate (WTI) crude futures fell 34 cents to $65.80 a barrel. So far this month, the Brent crude price has risen by 5.5 percent through last week's close. Asian shares closed mixed on Monday after greater China markets gave up early gains to trade lower in the afternoon. Japan's Nikkei 225 reversed early gains to close nearly flat at 23,629.34, with energy-related stocks, trading houses and automakers mostly higher on the day. South Korea's benchmark Kospi index climbed 0.91 percent to end at 2,598.19. Greater China markets, which had mostly traded higher in the morning, slipped into negative territory in afternoon trade. On the mainland, the Shanghai composite lost 0.97 percent to close at 3,523.50 and the Shenzhen composite fell 1.56 percent to end at 1,919.80. The blue chip CSI 300 index lost 1.81 percent by the end of the day. Hong Kong's Hang Seng Index declined 0.51 percent by 3:52 p.m. HK/SIN. Gold fell on Monday as a revival in the dollar and a rise in bond yields to multi-year peaks prompted some buyers to cash in gains in the metal after its sixth weekly price increase in seven weeks. Gold has risen more than 3 percent so far this month, and after a strong end to December touched its highest since August 2016 last week at $1,366.07 an ounce. Its strength has been driven largely by a slide in the dollar index to three-year lows. An uptick in the currency on Monday after six straight weeks of losses has prompted a pullback. Spot gold was down 0.44 percent at $1,343.80 an ounce at 8:17 a.m. EST, while U.S. gold futures for February delivery were down 0.74 percent an ounce at $1,342.10.