China stocks down (again), oil under $30 (again) and the dollar has been on a tear. Here are some of the things people in markets are talking about this morning.
The Shanghai Composite Index entered a bear market, closing 3.5 percent lower, down 21 percent from its December high. “The bottom has fallen out of the market,” said Francis Lun, chief executive officer at Geo Securities Ltd. in Hong Kong. The Chinese selloff has spread to European equities, with the Europe Stoxx 600 index 1.9 percent lower at 10:55 a.m. London time and U.S. futures sliding over 1 percent after the index gained 1.7 percent yesterday.
Oil continues to plunge
Both West Texas Intermediate and Brent futures are back below $30 a barrel this morning and are down more than 10 percent this week, heading for their third weekly drop this year. With the end of Iran sanctions expected as early as this weekend, oil futures are factoring increased supply, with Brent futures trading at a discount to WTI through October 2017. On a longer horizon, some see signs that this could be the start of the end of the age of oil.
It's not just oil that is having a horrid time, with industrial metals heading for their second weekly drop in a row as all base metals fell on the London Metal Exchange. In precious metals, gold has only been able to muster a small 0.3 percent increase to $1081.5 an ounce today, and is still in line for its worst week since November. U.K. listed miners, which had rallied strongly yesterday are plunging again this morning, with Anglo American PLC down over 10 percent.
Earnings looking awful
As fourth-quarter earnings season kicks off, results for S&P 500 companies are expected to show profits down for the third quarter in a row, with Q4 2015 likely to represent the worst earnings season since 2009. If anything, it is worse in the rest of the world as analyst profit downgrades last week outnumbered upgrades by the most since 2009. Bankhaus Lampe’s Ralf Zimmermann said "this is not just China, it’s far more widespread. There are few places to hide. Even defensives will feel the pain.”
The U.S. dollar is on its best run since July 2015 as turmoil in markets are giving the currency a boost, even as odds of further Fed rate rises are pushed back. The strength is particularly clear against petro-currencies such as the Canadian dollar which is on its longest losing streak since at least the 1970s.
What we've been reading
This is what's caught our eye over the last 24 hours.
- Saudi life with $30 oil.
- Apple may be on the hook for an $8 billion tax bill.
- The British pound is heading for Thatcher era levels.
- Dutch populist Wilders says the EU is finished.
- Goldman says it will pay $5.1 billion in mortgage probe.
- Watch out Silicon Valley, China wants to eat your lunch.
- Trump's most solid debate yet.
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