As far as stock markets are concerned; a bigger than expected slowdown to US growth in the fourth quarter made an ugly combination with a more hawkish Federal Reserve set on a mid-year rate hike.
Chinese manufacturing falling into contraction, peace talks breaking down in Ukraine, a Greek threat to the Eurozone added to the US growth slowdown is what’s setting up for a cautiously mixed start to trading on Monday.
The S&P 500 has declined over 3% in January driven down by collapsing earnings inside the energy sector; expectations are now for flat earnings overall for the S&P 500 in Q4 and a decline in Q1 2015.
The story from Exxon Mobil Corporation (NYSE:XOM) before the open on Monday is expected to be another one of ravished earnings from falling Oil prices very much akin to what’s been reported from Royal Dutch Shell A (LONDON:RDSa) and Chevron Corporation (NYSE:CVX) and is likely to be again from BP Plc (LONDON:BP) on Tuesday.
It will be important to see how Exxon fared in the fourth quarter after the slump in oil prices but given the price of crude has fallen even more since then; the oil major’s outlook for 2015, the extent of cuts to its capital spending and intended production levels will be key for share price performance.
On the face of it, a decline of just over 7% in Exxon shares in the last twelve months when compared with a 50% plus drop in oil prices shows a relatively strong performance. At just above $85; shares sit at a floor in prices that’s held up since June 2012 and disappointment over Q4 earnings could open up another wave of selling towards $75, last seen in November 2011.
The rest of the week will see important earnings released by General Motors, Gilead Sciences, Twitter, Walt Disney, Merck & Co and Sprint.
The core PCE price index and ISM Manufacturing data is released on Monday.
Futures suggest the:
S&P 500 will open unchanged at 1,994 with the
Dow expected to open 11 points higher at 17,175 and the
NASDAQ 4 points lower at 4,144.
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