Nothing like a nice, quiet start to the year
The market shook out the holiday cobwebs in a hurry. The yen is soaring and stocks are getting smashed. S&P 500 futures are down 35 points, or 1.7% while AUD/JPY is down almost 3%.
The thing about the first trading day of the year is that no one wants to step in and fight the momentum. Funds that come into the year flat aren't in a hurry to fight the momentum.
Two things set it off:
1) The trouble in the Middle East with Iran and Saudi Arabia at one another's throats
2) The offshore Chinese yuan falling nearly 1% and Shanghai shares down nearly 7%. The weak Caixin PMI and a Chinese state-owned shipbuilder falling into bankruptcy added to the worries. Even with yuan weakness and the other stories, that's no reason to pummel Chinese stocks but fear has funny ways of working and that's the story today.
Note that US stocks had a similarly rough start to 2015. The S&P 500 fell more than 60 points in the first three days of trading and then rebounded to finish the week fractionally higher in a volatility start to trading.
Manufacturing is the highlight on the US economic calendar with the Market data due at 8:45 am ET and the ISM manufacturing report at 10 am.
