The new trading week finds energy prices under pressure again with Natural Gas down 3.7% and Crude Oil down 3.3%. While natural gas weakness can be blamed on a continuing milder than usual winter season, the selloff in oil may have wider implications.
Despite ongoing hostilities in the Middle East, Saudi Arabia slashed its February price for Asia Pacific customers, suggesting that Chinese demand remains soft. Another sign that China’s economy remains a concern is that one of its shadow banks declared bankruptcy over the weekend sending Hong Kong down 1.9% and Shanghai down 1.4% overnight.
US index futures are trading flat to down 0.4% this morning. Dow Futures are taking the largest hit, likely mainly due to Boeing* down 7.4% after a flight incident over the weekend led to the 737 Max 9 fleet being grounded by the FAA. European trading action is mixed with the Dax up 0.2% and the FTSE down 0.2%.
Treasury yields are holding steady today with the US 10-year sitting near 4.05%. Action in the major currencies is quiet but we are seeing some rotation in alternative currencies with capital moving from precious metals to cryptos. Gold is down 1.0%, and Silver is down 0.75%, while Bitcoin is up 1.9% and Ethereum is up 0.8%. In other metals action, Copper and Platinum are flat today.
Eurozone retail sales (-1.1% vs street -1.5%) were not as bad as feared, otherwise it has been a relatively quiet day for economic data. The next major economic report is not until Thursday when US Consumer Prices come out, followed by US Producer Prices on Friday.
Earnings season kicks off on Friday with several of the largest US big banks, UnitedHealth and Blackrock all set to report results. Confession season has been quiet to date which could be seen as a positive since last week would have been and opportune time to sneak out a profit warning with a lot of investors still on the holiday break that is now over.
*Shares of Boeing are held in some portfolios managed by SIA Wealth Management.