On 21 December, 2015 – US stocks rebounded from last week’s selloff

Shares were mixed in Asia but down in Europe thanks to troubles in Spain.

United States

United States markets advanced Monday even though energy stocks continued to fall as the price of oil sank. The Dow Jones industrials were up 0.7 percent, the S&P gained 0.8 percent and the Nasdaq added 0.9 percent. Crude oil continued to sell off, hitting levels not seen since the financial crisis. Energy stocks continued to fade as a result. Stocks spent the session trading in a wide range but mostly clung to positive territory. Light holiday week trading volumes left stocks open to wider than usual moves according to traders.

Keeping a lid on gains was renewed selling in oil and junk bonds, two corners of the market that have been a source of pressure on stocks recently. Newfield Exploration and ConocoPhillips dropped. Sequential Brands Group gained after the company raised its revenue forecast for this year and said its acquisition of Martha Stewart Living Omnimedia would help boost revenue sharply next year.

Stocks were bolstered earlier after China’s leaders signaled Monday they will take further steps to support growth and put a floor under the economy's slowdown, including widening the fiscal deficit and stimulating the housing market. Monetary policy must be more “flexible” and fiscal policy more “forceful” as leaders create “appropriate monetary conditions for structural reforms,” according to statements released at the end of the government’s Central Economic Work Conference.

Federal Reserve Bank of Atlanta President Dennis Lockhart said today the Fed’s commitment to a “gradual” tightening suggests rates could be raised at every other meeting of the policy-setting Federal Open Market Committee, though the actual pace will depend on incoming economic data. Reports later this week on home sales, durable goods orders and personal income will offer further cues.

These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was up US$16.25 to US$1,078.75. Copper futures were up 1.2% to US$2.14. WTI spot crude was up 1 US cent to US$34.74. Dated Brent spot crude was down 66 US cents to US$36.22. The US dollar was up against the pound and the Canadian dollar. However, it declined against the yen, euro, Swiss franc and the Australian dollar. The Dollar Index was down 0.3 percent. The yield on US Treasury 30 year bond was unchanged at 2.91 percent while the yield on the 10 year note slipped 1 basis point to 2.19 percent.

Europe

Shares gave up their early gains and dropped as losses in Spain and a rise in the euro weighed on the region's stock markets. The FTSE was down 0.3 percent, the CAC lost 1.3 percent, the DAX declined 1.0 percent and the SMI was 0.7 percent lower.

Spain's IBEX was the worst performer, tumbling 3.6 percent after an inconclusive Spanish election result, while Spanish 10-year government bond yields also hit one-month highs after the election. A rise in the euro against the US dollar also weighed on European shares, since a stronger euro can make it harder for European companies to export goods overseas.

Shares in Spanish banks fell sharply, with CaixaBank and Santander plummeting. Neither Prime Minister Mariano Rajoy's conservatives nor left-wing parties won a clear mandate to govern in Sunday's poll, casting further uncertainty over the outlook for Spain's reform program and the broader economy. Talks on forming a coalition government are expected to take weeks.

Brent futures declined during early trade Monday to as low as $36.05 per barrel, their weakest since July 2004. Around the European close, Brent was slightly above this, at $36.16 a barrel.

Metal prices have been under pressure this year due to concerns of oversupply from China and low demand. The news to cut overcapacity on Monday boosted mining stocks. Glencore traded higher helped by a broker upgrade. Anglo American also posted strong gains, however both stocks pared gains prior to the close. Volkswagen and Porsche also pared gains to close only slightly higher.

Asia Pacific

Asian markets ended mixed Monday after US stocks suffered steep losses for a second day running on Friday in reaction to low oil prices and increased volatility on account of quadruple witching. While Japanese shares extended Friday's losses on a weaker yen and amid fading hopes of new Bank of Japan stimulus, a rally in Chinese shares helped spur some recovery across the region.

The Nikkei retreated 0.4 percent. The index fell as much as 1.8 percent before closing off its day's lows. A firmer yen put pressure on exporters, with Honda Motor, Nikon and Panasonic declining. Toshiba slumped on the buzz that it would post a record annual loss of ¥500 billion. Sharp advanced on a Nikkei report that US buyout firm KKR is interested in investing in the company. Kirin Holdings rallied after the brewer said it would impose temporary pay-cuts on senior executives.

Both the S&P/ASX and All Ordinaries were virtually unchanged on the day. Crown Resorts jumped after James Packer resigned as its director amid speculation he is looking to take the casino operator private. Westfield dropped after raising $A1.5 billion from the sale of five shopping malls in the United States.

The Shanghai Composite added 1.8 percent — a four week high — after China Vanke unveiled plans for a major restructuring. The Hang Seng was up 0.2 percent on hopes Beijing will deepen reforms of state owned enterprises. The Kospi was up 0.3 percent after a Moody's ratings upgrade. India's Sensex was up 0.8 percent.

Looking forward

December GfK consumer climate survey for Germany will be released along with the UK public sector finances for November. In the US, the final estimate of third quarter gross domestic product and corporate profits will be reported along with November existing home sales and October FHFA house price index. The Richmond Fed manufacturing index will also be posted.

Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.