Before markets open to start the week, here’s what you need to know.
Chinese stocks saw another big drop. China’s Shanghai Composite tumbled 5.3% on Monday, bringing its 2016 loss to 14.8%. Had Chinese authorities not announced the removal of circuit breakers, Chinese stocks would have at least been temporarily halted during the decline at a loss of 5%. Monday’s selling came despite Beijing surprising many by strengthening the yuan to 6.5626 per dollar.
Oil is under pressure again. Overnight, West Texas Intermediate crude oil hit a low of $32.24 per barrel. The energy component has trimmed some of its early losses, but remains under pressure, trading down 1.9%% at $32.53. So far in 2016, WTI crude oil is down about 11%.
Shell’s CEO says low oil prices won’t last long. Shell CEO Ben van Beurden thinks low oil prices aren’t here to stay. “The oil prices we are seeing today are not sustainable and are going to settle at higher levels,” van Beurden said. The statement comes just a week after Shell’s finance director, Simon Henry, suggested oil could fall below $20 per barrel.
Thermo Fisher is buying Affymetrix. Thermo Fisher will pay $14 per share of Affymetrix, a 52% premium to Friday’s closing price. The deal values the company at $1.3 billion. According to Bloomberg, “Affymetrix’s products will help Thermo Fisher expand its array of laboratory equipment, which also includes diagnostic tools for hospitals and mass spectrometers for chemists.” Thermo Fisher says the acquisition will be accretive to earnings, adding $0.10 per share during the first full year.
Arch Coal filed for bankruptcy. The second-largest coal miner in the US has filed for Chapter 11 bankruptcy. According to Arch Coal, the bankruptcy filing will eliminate about $4.5 billion of debt from its balance sheet. Reuters reports, Arch Coal is the fourth US coal producer to file for bankruptcy, following Walter Energy, Alpha Natural Resources and Patriot Coal.
Kohl’s might be going private. The Wall Street Journal reports department store chain Kohl’s is considering going private or breaking itself up. The retailer has been under significant pressure over the past three quarters despite seeing a revival in sales as shares have tumbled 40% from the April high of $79.07. Kohl’s finished Friday’s session at $47.88 per share.
Wanda Group’s revenue surged. The Chinese conglomerate announced 2015 revenue surged 19.1% to 290.16 billion yuan ($44 billion). The strong quarter came despite a deteriorating outlook for the Chinese economy as overseas investments provided support. Wanda Group’s founder and CEO is Wang Jianlin, China’s richest man. According to Bloomberg Billionaires, Wang is worth $32.4 billion.
Alcoa unofficially kicks off earnings season. Alcoa will report its fourth quarter earnings after the closing bell. The aluminium giant is expected to earn $0.02 per share on revenue of $5.3 billion.
Stock markets around the world are mixed. Aside from the weakness in China, Hong Kong’s Hang Seng (-2.8%) lagged in Asia. In Europe, Germany’s DAX (+0.4%) leads the way up. S&P 500 futures are higher by 10.25 points at 1921.50.
Economic data is absent. Data flow for the week begins on Tuesday with the release of the JOLTS report and remains relatively light until Friday. The US 10-year yield is higher by 5 basis points at 2.15%.