Good morning! Here’s what you need to know in markets for Tuesday.
Russia Hiked Interest Rates To 17% From 10.5% To Defend The Crumbling Ruble. This surprise announcement from the central bank came after the ruble got absolutely crushed on Monday, losing more than 10% of its value against the US dollar and falling to below 64 against the it. Earlier this year, one dollar bought about 35 rubles.
IT DIDN’T WORK. After rallying briefly, the ruble collapsed to new lows. Just before 7 a.m. ET, Russia’s currency fell to as low as 75 rubles per dollar.
The Oil Rally Reversed. After rising earlier Monday, oil prices fell back into a slump as trading went on. WTI crude fell to as low as $US54.01 per barrel at about 4:30 a.m. ET. Brent crude got as low as $US58.86 at about 7 a.m. ET.
China’s Slowdown Looks Even Worse. HSBC’s purchasing managers index (PMI) for China’s dominant manufacturing sector came in at 49.5; analysts expected a read of 49.8. Any reading below 50 indicates that a sector is contracting. This is the worst reading the country has had in seven months.
Markets Are Sliding. US futures are lower, with Dow futures down 58 points and S&P futures down 9 points. Europe is mixed, with Britain’s FTSE up 0.5%, France’s CAC 40 down 0.5%, and Germany’s DAX flat. Japan’s Nikkei took another kicking, losing 2.01% at the close. Hong Kong’s Hang Seng closed down 1.5%.
The Fed Meets. The Federal Reserve begins its two-day Federal Open Market Committee meeting on Tuesday. It will publish its monetary policy announcement at 2 p.m. ET Wednesday.
German Sentiment Improves. Germany’s ZEW index of economic sentiment surged to 34.9 this month. That’s up from 11.5 in November, flying much higher into positive territory. “This is fully in line with the bounce earlier this month in the Sentix indicating that investors in the eurozone’s largest economy are getting much more upbeat about the future,” Pantheon Macroeconomics’ Claus Vistesen said. “As such, a looming political chaos in Greece and a Russian economy on the edge of the abyss have not been able to dent investor sentiment this quarter, and our bet is that the expectation of broad-based and aggressive QE at the ECB is the key driver of the surge in both the headline and expectations index.”
The Eurozone Is Growing. The eurozone’s flash PMI reading for December came in at 51.7. Anything over 50 signals an expansion: The higher the figure, the more rapid the growth. Last month, the PMI figure overall fell to 51.1, a 16-month low. “On one hand, the upturn in the PMI supports the view that the ECB’s stimulus is starting to take effect and that more time is needed to assess the impact of current measures,” Markit’s Chris Williamson said. “On the other hand, the disappointing rate of expansion, and especially the weakness evident in Germany and France, will add to calls for additional stimulus to be sanctioned without further delay.”
Greece’s Leftist Radicals Are Still Leading In Polls. The survey conducted by GPO pollsters for MEGA TV showed support for Alexis Tsipras’ Syriza at 28% versus the center-right New Democracy, which would get 23.1%, if elections were held now. The poll comes a day ahead of the first round of a presidential vote among Greece’s legislators, which could trigger snap elections.
Boeing Just Boosted Its Share Buyback To $US12 Billion. The aeroplane manufacturing giant raised its share repurchase authorization to $US12 billion from $US10 billion and said it would increase its quarterly dividend.