US stocks closed lower on Monday paring sharp losses amid worsening market sentiment on continued fears about global economic slowdown. The dollar weakened, live dollar index data indicate the ICE US Dollar Index, a measure of the dollar’s value against a basket of six major currencies, fell 0.5% to 96.6010. The Dow Jones Industrial Average lost 1.1% settling at 16027.05. Visa and Goldman Sachs were the worst Dow performers, down 5.3% and 4.6%, respectively. The S&P 500 fell 1.4% to 1853.44 led by materials stocks and financials, which were down 2.7% and 2.6% respectively. Facebook shares tumbled 4.2%, while Twitter sank 5.3%. Energy stocks were up 0.1%, managing to close in positive territory despite falling oil prices. The selloff in equities pushed the S&P 500 below its closing low of January 20 as investors bought safe haven assets, pushing Treasury prices up and yields to 12 month low. Financial stocks were hit hard amid concerns the Federal Reserve may not implement the 100 basis point rate hike in 2016 as economic data point to slower growth of US economy. Investors will be watching closely Fed Chair Janet Yellen’s semiannual testimony to Congress on economic policy which starts tomorrow. Today at 12:00 CET January Small Business Optimism Index will be released by National Federation of Independent Business in US. And at 16:00 CET Job Openings and Labor Turnover Summary results will be published. At the same time December Wholesale Inventories and Sales will come out. The tentative outlook is positive.
European stocks fell on Monday, continuing the slide after euro’s gains following Friday’s release of disappointing US nonfarm payrolls. The Stoxx Europe 600 closed down 3.5%. Germany's DAX 30 dropped 3.3% to 8979.36 as stronger euro hurt competitiveness of exporters. DAX 30 entered bear market, posting 21.11% decline from November 30, 2015 high. France's CAC 40 and UK’s FTSE 100 indexes dropped 3.2% and 2.7% respectively. Investors sold off banking stocks on expectations of low levels of global interest rates on the backdrop of slowing global growth and weak earnings. Among the biggest decliners Eurobank Ergasias sank 29%, Banca Monte dei Paschi plunged 12%, Commerzbank AG dropped 9.5%. Today at 10:30 CET December Trade Balance will be published in UK. The tentative outlook is negative.
Nikkei posted the biggest loss in 3 years closing down 5.4% today. It has slumped 15% year to date on concerns about a slowdown in China's growth and disappointing corporate earnings. Banking stocks led the losses with the sector under pressure since the Bank of Japan surprise announcement about adoption of negative interest rate on excess deposits. Exporters were hit hard as yen strengthened to 13-month high against dollar, with Toyota Motor loosing 6.1%, Honda Motor dropping 6.7% and Nissan Motor sinking 7.2%. Chinese stock markets are closed all week for the Lunar New Year holiday.
Oil futures prices are edging higher today supported by weaker dollar after closing lower for the third session on Monday. March WTI fell 3.9% to $29.69 a barrel on the New York Mercantile Exchange, while Brent lost 3.5% to $32.88 a barrel on London’s ICE Futures exchange. American Petroleum Institute industry group releases its weekly inventory report today. There are no signs global oil demand is rising while crude oversupply endures.
Gold is rising today after spot gold hit intraday high $1,200.60 on Monday, its strongest since June 22, 2015.