Sentiment Downbeat As Commodities Retrace Gains

(RTTNews) - The major U.S. index futures are pointing to a moderately lower opening on Monday, with a lack of any major catalysts failing to give any clear direction to the markets. Commodities are bound southward, with oil leading the slide with over a $1-a-barrel drop, as the dollar finds its footing following a down week. Asia threw in some lackluster economic data, including a worse than expected drop in Japanese industrial output and weak Chinese industrial profit data. Asian stocks reacted with a mixed move.

European stocks are lower amid little local news. With little domestic corporate and economic news flow and the slide in oil prices, the U.S. Markets could find difficulty finding footing.

U.S. stocks rallied sharply in the holiday-shortened week ended December 24th, as bargain hunting lifted the averages, thanks to the onset of the year-end Santa Claus rally.

Last Monday, the major averages rebounded from a 2-session slide and advanced solidly, helped by bargain hunting and firmness in most base metal prices. The commodity rally continued to bode well for stocks on Tuesday, sending the major averages moderately higher.

Amid oil's rally and mixed economic data, the major averages rallied strongly on Wednesday. The averages closed Thursday's truncated session narrowly mixed amid a lack of major directional cues.

For the week ended December 24th, the Dow Industrials rose 423.62 points or 2.47 percent to 17,552. The S&P 500 Index climbed 55.44 points or 2.76 percent to 2,061 and the Nasdaq Composite added 125.41 points or 2.55 percent before ending the week at 5,049.

The S&P 500 Index is up 0.10 percent for the year, while the Nasdaq Composite has climbed 6.60 percent.

Among the sectors, the Philadelphia Oil Service Index and the NYSE Arca Gold Bugs Index rallied over 6 percent for the week and the Dow Jones U.S. Basic Materials Index and the NYSE Arca Oil Index advanced over 4 percent each,

Additionally, the Dow Jones Transportation Average, the NYSE Arca Airline Index, the NYSE Arca Biotechnology Index, the Philadelphia Housing Sector Index, Philadelphia Semiconductor Index, the NYSE Arca Computer Hardware Index, the NYSE Arca Broker/Dealer Index and the KBW Bank Index all rose over 3 percent.

Currency, Commodity Markets

Crude oil futures are slipping $0.37 to $37.73 a barrel after advancing $2.04 or 5.66 percent to a 3-week high of $38.10 a barrel in the week ended December 24th. The commodity found support last week from the dollar rally losing steam, bargain hunting after its tumble to a nearly 7-year low and the weekly petroleum status report showing a drawdown in crude oil inventories

Gold futures, which climbed $10.90 or 1.02 percent to $1,075.90 an ounce in the previous week, are currently receding $3.30 to $1,072.60 an ounce.

Among currencies, the U.S. dollar weakened in the week ended December 24th amid profit taking. The dollar lost 0.69 percent against the yen last week before ending at 120.33 yen and fell 0.85 percent against the euro to $1.0960 a euro.

The U.S. dollar is currently trading at 120.48 yen and is valued at $1.0972 versus the euro.

Asia

Asian stocks ended mixed in post-Christmas break trade, with Japanese stocks advancing as the yen rally lost steam amid the release of some lackluster domestic economic data on industrial production and retail sales. The key averages in South Korea, China and Hong Kong all fell over 1 percent. The Australian and New Zealand markets were closed for Boxing Day Holidays.

After a lackluster morning session, Japan's Nikkei 225 Index advanced strongly in the afternoon before consolidating its gains going into the close. The index ended up 104.29 points or 0.56 percent at 18,873.

Most export, housing, textile, real estate, paper, chemical, pharma, glass, steel, mining, finance and utility stocks settled the session higher. However, food and rubber stocks came under selling pressure.

Among individual stocks, Sharp rallied 7.27 percent on reports Taiwan's Foxconn is considering a 300 billion yen offer for the company. Pioneer, Toho Zinc and Oki Electric jumped over 6 percent each. Mitsui Engineering & Shipbuilding climbed 5.24 percent and Furukawa Electric added 5.15 percent. On the other hand, Kirin Holdings slid 3.57 percent.

A report released by Japan's Ministry of Economy, Trade and Industry showed that industrial output fell 1 percent month-over-month in November, dropping for the first time in 3 months. Economists expected a 0.5 percent drop for the month. Annually, industrial production fell a worse than expected 1.6 percent.

The Ministry maintained its assessment of the metric, repeating that output has been fluctuating indecisively. Based on its survey, the Ministry now expects a 0.9 percent increase for December and a 6 percent rise for January.

A separate report showed that Japanese retail sales fell 1 percent year-over-year in November, worse than the 0.1 percent drop expected by economists. Large retailers' sales were down 1.5 percent.

After showing nervousness throughout the morning, China's Shanghai Composite Index declined steeply in the afternoon. The index plunged 94.13 points or 2.59 percent before settling at a 1-week low of 3,534.

The Chinese National Bureau of Statistics reported that profits earned by industrial enterprises declined for the sixth straight month in November. Profits fell 1.4 percent year-over-year, slower than the 4.6 percent drop in October.

Hong Kong's Hang Seng Index ended down 218.51 points or 0.99 percent at 21,920. South Korea's KOSPI lost 26.59 points or 1.34 percent before ending at 1,964.

Europe

European markets that were open for trading opened higher and saw volatility in early trading. The averages moved sharply lower in early afternoon trading. The weak sentiment comes amid a lack of major corporate and economic news and a retreat in commodity prices. The plunge in the Chinese market is impacting sentiment to some extent.

Among stocks in Paris, a majority are under selling pressure. Arcelor Mittal is slipping over 2.50 percent. Renault, Technip and EDF are also retreating notably.

In Frankfurt, chemical, consumer and technology stocks are moving to the downside but utility, financial and auto stocks are gaining ground.

U.S. Economic Reports

The unfolding holiday-shortened week has on its calendar some market moving economic reports on consumer confidence, manufacturing activity and the housing market.

Traders may closely track the Conference Board's consumer confidence report for December, the National Association of Realtors' pending home sales index for November, the weekly jobless claims report and MNI Indicators' Chicago-area business barometer for December.

The results of the Dallas Federal Reserve's regional manufacturing survey for December, the S&P/Case-Shiller house price index for October and the results of Treasury Department auctions of 2-year, 5-year and 7-year notes round up the economic events of the week.

The Dallas Federal Reserve is set to release its general activity index for December at 10:30 am ET. Economists expect the index to worsen to -6 from -4.9 in November.

Stocks in Focus

Valeant Pharma (VRX) announced that its Chairman and CEO Michael Pearson will be on medical leave of absence, effectively, following him being treated for a severe case of Pneumonia. The company said it has created an office of the CEO, including its General Counsel, Group Chairman and CFO, to serve in an interim capacity.

Majesco (COOL) announced that it has regained compliance with the NASDAQ's listing requirements, having satisfied the NASDAQ listing rule regarding maintaining an audit committee consisting of 3 independent directors.

Chimerix (CMRX) announced that its Phase 3 SUPPRESS trial of brincidofovir in patients undergoing cell transplantation did not meet its primary endpoint of preventing cytomegalovirus infection through Week 25 transplant.