Monday, December 28, 2015

Lower markets with more selling in oil

Dow fell 90, decliners over advancers 4-1 & NAZ lost 36.  The MLP index is down 8+ to the 281s & the REIT index was off 1+ to 323.  Junk bond funds slid lower & Treasuries inched higher.  Oil dropped (see below) & gold was also weak, near multi year lows.

AMJ (Alerian MLP Index tracking fund)

CLG16.NYM...Crude Oil Feb 16...37.19 Down ...0.91  (2.4%)

GCZ15.CMX...Gold Dec 15.....1,079.60 Up ...2.40 (0.2%)

A late surge in shopping & pent-up demand for woman's clothing gave a boost to holiday sales, according to early spending figures.   US retail sales rose 7.9% between Black Friday & Christmas Eve, excluding autos & gas, with women's apparel & furniture seeing the biggest gains, according to figures from MasterCard Advisors.  For all of Nov & Dec, sales were up 4.6%, slightly better than expected.  The figures indicate that consumers are starting to feel more confident and buying big ticket items like new sofas, said Sarah Quinlan, senior VP of market insights for MasterCard.  They’re also tapping the extra cash they’ve gained from cheap gas prices.  Consumers spent 72¢ of every dollar they saved from lower fuel costs, MasterCard found.  “This shows that consumers are feeling more confident that they are going to get that bonus or have a job a year from now,” Quinlan said.  Cooling temps in many part of the country probably helped drive a double-digit sales increase in women's clothing, which has been selling poorly for the past 6 months.  But not every retailer was a winner.  Men's apparel & electronic sales declined, as did luxury items such as watches & jewelry.  Online sales rose 20%, with 70% of consumers doing more research online than last year.  MasterCard’s figures comes from credit card transactions as well as consumer surveys on spending with cash & checks.

U.S. Retailers Get Late Shopping Surge, Lifting Holiday Sales

China’s net imports of gold from Hong Kong dropped for a 2nd month in Nov as investors were deterred by bearish prospects for prices amid rising US interest rates.  Net purchases declined to 66.8 metric tons from 68.2 tons in Oct & 87.2 tons a year earlier, according to data from the Hong Kong Census & Statistics Dept.  The mainland bought 103.1 tons, including scrap, compared with 87.8 tons a month earlier.  Exports to Hong Kong were 36.3 tons from 19.7 tons.  Demand weakened amid expectations that the US would raise benchmark borrowing costs, a move since confirmed, & continue with gradual increases during 2016.  Higher rates hurt gold because the metal doesn't pay interest.  The outlook for increases means bullion could drop to $950 further.  Shipments from Switzerland to China dropped to 16.5 tons in Nov from 29 tons a month earlier, according to data from the Swiss Federal Customs Administration.

China’s Gold Imports Fall for Second Month Before Rate Increase

Oil fell close to $37, within sight of an 11-year low, pressured by excess supply that has more than halved prices since the downturn began in mid-2014.  Trading volume was lighter than normal.  US crude was trading below global benchmark Brent, having earlier in Dec risen to a premium for the first time in about a year following the lifting of a 40-year-old ban on most US crude exports.  Figures from the OPEC imply a glut of more than 2M barrels per day, equal to over 2% of world demand.  Oversupply is expected to persist into the earlier part of next year.  Signs on today that a further demand stimulus from low crude prices may be limited also added pressure.  In Japan, total oil product sales in Nov fell to a 46-year low.  In Europe, demand growth for oil products turned negative in Oct.  The drop in prices gained impetus after OPEC, led by top exporter Saudi Arabia, a year ago dropped its longstanding policy of cutting output to support prices in favor of defending market share.  While the price collapse has partly achieved OPEC's goals by curbing growth of competing supplies, it has put finances in producing nations under more strain, even in the relatively wealthy Gulf states.  Saudi Arabia today announced plans to shrink a record state budget deficit with spending cuts & a drive to raise revenues from sources other than oil.

Oil Prices Plunge, Supply Worries Resurface

There is not a lot of trading, so price swings will not supply much meaning.  The first glimpse on retail sales looks good, but more data will follow.  Now that the trauma over Janet Yellen's rate hike is over, depressed oil should be the major driver in the stock market.

Dow Jones Industrials

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