Energy shares drove losses in the US and European markets last week. Markets in Asia remained mostly in the red this morning, extending losses on the back of another Wall Street sell-off on Friday. US markets are closed today for Martin Luther King Jr. Day.
United States
US stocks closed sharply lower on Friday, locking in the worst 10-day start to a calendar year ever, as oil prices plunged and investors worried about slowing growth in the US. During the course of the session, the S&P 500 broke below its August 24 low—which several market strategists said would be tantamount to a major sell signal—to trade at its lowest level since October 2014. The S&P 500 slid 2.3%, largely due to the financial, technology and energy sectors. The Dow Jones Industrial Average slumped 2.4% and the Nasdaq Composite tumbled 2.7%.
Oil appeared to be the main driver of concern. Both the US and global benchmarks settled below $30 a barrel, as investors feared that supplies will continue to rise as Iran prepares to enter the market and Russia continues producing oil to help support its flagging economy.
Intel’s shares plummeted following its earnings release, while Analog Devices declined after it lowered its revenue outlook. Major oil companies Chevron and Exxon Mobil were also among the big losers. Shares in JP Morgan Chase, Citibank and BlackRock fell despite upbeat results.
On the economic front, a spate of disappointing US data indicates that both manufacturing and consumer spending are in trouble. The Empire State factory index declined sharply in January to its lowest level since the recession. Retail sales declines by 0.1% in December; a report on industrial production compiled by the Federal Reserve showed that activity declined for the third straight month. The lone bright spot was a report on consumer sentiment in January, which rose to 93.3 from a preliminary reading of 92.6 in the University of Michigan’s preliminary January reading.
Europe
European stocks were battered Friday, with energy company shares taking another beating as oil prices dropped below $30 a barrel, leaving the market lower for a third straight week. The Stoxx Europe 600 slumped 2.8%, with no sectors gaining ground. The worst performing were the oil and gas and basic resources sectors, with key indexes closing down 3.8% and 6.3%, respectively. The UK’s FTSE 100 shed 1.9%, ending at a three-year low, while Germany’s DAX 30 slid 2.5% and France’s CAC 40 dropped 2.4%.
Among oil producers, Tullow Oil, Spain’s Repsol and Austria’s OMV were among the largest decliners. BHP Billiton’s shares plummeted after it said that it is booking a $7.2 billion pretax charge against its US onshore energy assets, which have been hurt by the decline in oil prices. Shares in Renault fell after the French car maker confirmed fraud investigators had searched three of its sites. On a positive note, shares in Hennes & Mauritz rose after the clothing retailer said sales, including value-added tax in December, were 10% higher in local currencies compared with the same month last year.
Asia Pacific
Shares in Asia fell sharply on Monday as anxieties grew about weakness in China and a further decline in oil prices. The S&P/ASX 200 was fell 0.8%, down 19% from its April peak. The Nikkei Stock Average fell 1.6%, down 18% from its June peak.
The Shanghai Composite Index opened 0.4% after falling into bear market territory on Friday. The Hang Seng Index, which has stayed in a bear market since August, was 1.2%. South Korea’s Kospi fell 0.3%.
A global rout deepened in Asia amid concerns about China’s slowing economy and falling commodity prices. Weak US retail sales data released on Friday also raised concerns about the strength of the US economy.
Energy stocks came under renewed pressure after US crude plunged 5.7% to $29.42 a barrel on Friday. Oil prices have sunk to fresh lows after Western sanctions on Iran were lifted over the weekend, paving the way for the Middle Eastern nation’s full re-entry into the global oil market. Iranian officials said that the country was preparing to raise output by 500,000 barrels a day.
Australia’s energy sector was down 3%, with shares in Liquefied Natural Gas and Oil Search plummeting.
Global Stock Markets

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.
Looking forward*

The following indicators will be released this week…

 

Europe

 
 
 
 

January 19

EU

Current Account (November)

 
 

Inflation rate (monthly and yearly) (December)

 
 

ZEW Economic Sentiment Index (January)

 

UK

Core inflation rate (December)

 
 

Retail Price Index (monthly and yearly) (December)

 
 

Inflation rate (monthly and yearly) (December)

January 20

UK

Unemployment Rate (November)

January 21

EU

ECB Interest Rate Decision

 
 

ECB press conference

 
 

Consumer Confidence Flash (January)

January 22

EU

Markit Composite PMI Flash (January)

 
 

Markit Manufacturing PMI Flash (January)

 
 

Markit Services PMI Flash (January)

 

UK

Retail Sales MoM (monthly and yearly) (December)

 
 
 

Asia/Pacific

 
 

January 18

Australia

TD-MI Inflation Gauge (monthly) (December)

 
 

New Motor Vehicle Sales (monthly and yearly) (December)

 

Japan

Industrial production (monthly and yearly) (November)

January 19

China

GDP growth rate (Q4)

January 20

Australia

Westpac Consumer Confidence Change (January)

 

Japan

Reuters Tankan Index (January)

January 21

Japan

Stock Investment by Foreigners (January)

 

Australia

Consumer Inflation Expectations (January)

January 22

Japan

Nikkei Manufacturing PMI Flash (January)

 
 
 

Americas

 
 

January 19

United States

Redbook

 
 

NAHB Housing Market Index (January)

January 20

United States

Overall Net Capital Flows (November)

 
 

Core inflation rate (monthly and yearly) (December)

 
 

Housing starts (December)

 
 

Building permits (December)

January 21

United States

Continuing Jobless Claims (9 January)

 
 

Initial Jobless Claims (9 January)

 
 

Philadelphia Fed Manufacturing Index (January)

January 22

United States

Markit Manufacturing PMI Flash (January)

*Note — all releases are listed in local time.