Friday, January 15, 2016

A VERY ROUGH DAY IN EUROPE AND ASIA AND A ROUGH START FRIDAY IN U.S. MARKETS........

Dow futures down nearly 300 points as oil breaks under $30

Stock futures were skidding once again early Friday, as oil prices dropped below $30 a barrel and the Chinese market entered a bear market. Dow Jones Industrial Average futures dropped 288 points, or 1.8%, to 15,994, while S&P 500 futures slid 33.35 points, or 1.7%, to 1,881.50. Nasdaq 100  tumbled 82.50 points, or 1.9%, to 4,175.75.

The action threatens to reverse all of Thursday's gains for stocks.

It will be very interesting to see how investors respond today ahead of the long weekend, said Craig Erlam, senior market analyst at OANDA, in a note. Strong risk aversion ahead of the weekly close is a clear vote of no confidence in the markets, which doesn't bode well for the coming weeks. And if that's the case, it could suggest markets are experiencing the "calm before the storm," he said.


European stocks take another beating as oil slides

European stocks fell Friday, with energy company shares taking another beating as oil prices dropped below $30 a barrel, putting the market on track for a third straight weekly decline.

The Stoxx Europe 600 dropped 1.2% to 335.51, with no sectors gaining ground. The worst performing were the oil and gas, and basic resources, sectors, each down by more than 2%.

For the week, the Stoxx Europe 600 is on track for a 1.9% drop, which would be the index's third weekly fall in a row. It's lost about 8.5% year-to-date.

It may suggest that rather than seeing stabilization this week, what we've actually witnessed is the calm before the storm. I'm sure this will largely be determined by how Asian markets open next week.

China stocks sell off, enter a bear market

China's main stock benchmark entered a bear-market Friday, following a deep afternoon selloff that dragged markets in the rest of the region lower.

The Shanghai Composite Index  fell 3.55% to 2,900.97. The index has fallen 20% from its recent high, the definition of a bear market, reached on Dec. 22.

Elsewhere, Hong Kong's Hang Seng Index was down 1.4%, Australia's S&P/ASX 200 fell 0.3% and South Korea's Kospi slipped 1.1%.

Japan's Nikkei Stock Average was down 0.5%.

Traders and analysts attributed the sharp selloff to a Chinese state-run media outlet's report that some Chinese banks were no longer accepting stocks as collateral for loans. The prospect that liquidity could be drying up raised concerns among already-nervous investors about the outlook for the market, despite a rebound the previous day. If banks have stopped accepting loans as collateral "it will further tighten liquidity in the market and create panic selling."


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