U.S. Markets May Open Gingerly After IEA Report

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The U.S. stock markets might trade with caution today as the momentum across the global markets remained negative. Moreover, the stock futures are pointing to bearish sentiment while retreating from triple-digit losses during the early session with Nasdaq and S&P 500 Futures showing a decline of 0.50% to 3,944.75 and 1,842.75 respectively.

U.S. market summary

The indices were deep in the red yesterday after Dow Jones Industrial Average and S&P 500 Index lost 1.10% and 1.42% to 16,027.05 and 1,853 respectively.

Meanwhile, the global markets witnessed some major developments throughout the day, where oil update from the International Energy Agency (IEA) guided the direction of the European markets. The Agency has reiterated in its report that the oil glut is not likely to resolve until the end of this year. The agency projected oil supplies to surpass the demand by 1.75 million barrels per day as opposed to the estimate of 1.5 million per day surpluses predicted last month.

Though troublesome, the report did not disrupt the rally in oil, which marched above the $33 zone. The upward momentum in oil is believed to have come from weakening dollar that dropped steeply against the major currencies today, particularly the Japanese yen.

Major updates

Monday rout in markets prompted investors to rush for accumulating safe-haven assets such as the Japanese yen. The wild interest in yen brought the dollar to a 15-month low against the former to a level near 114.23. The reflection of fear became clearer as Japan’s Nikkei 225 experienced a sell-off to the tune of 5.40% to 16,085.44.

In Europe, major indices were mostly jittery after a 6-day sell off. The gap between the exports and imports in Britain hit a record high, which also added to the concerns. The German industrial output too inched down by 1.2% in December, fuelling worries about the recovery of the euro zone’s significant economy. Market participants continue to be anxious about the credit ratings and bond repayment abilities of the banks around the world.

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