Markets retreated on Friday night as investors were left confused by the state of the US economy, the US jobs market and the future direction of American interest rates.
And down markets will go today again, starting in Australia as a result of the sell-off on Friday night, especially in US tech stocks.
With Chinese markets closed all week, Hong Kong for three days and other markets in the region also shut for varying periods because of the Lunar New Year, it is going to be hard to get a handle on what is happening in the world’s most nervous stock markets.
But watch for nervousness about the slide on Friday in US tech stocks to drive sentiment and activity lower after Nasdaq’s 3.3% slump, which was driven by falls across the board among tech stocks of all types.
And keep an eye out for two days of testimony later in the week by Fed chair, Janet Yellen before both houses of the US Congress – that could very well spark more volatility when she discusses the path of US interest rates this year.
Watch the Aussie dollar – it lost ground on Friday night because of a change of heart about the US outlook for interest rates.
The local market expected to start with a 56 point, or 1.1% fall later this morning because of the sell-off in Europe and the US on Friday night.
It will also be a rough start to the first of the big weeks of the December 31 reporting season for interim and full year results.
Rio Tinto (Thursday and a full year) and the Commonwealth Bank (Wednesday and interim ) will be the major reports, along with the half yearly later this morning from retailer JB Hi Fi.
Eurozone shares fell 0.9% on Friday and US shares lost 1.9% as technology shares fell sharply on earnings worries.
The tech-heavy Nasdaq Composite slumped 146.41 points, or 3.3%, on Friday to end at 4,363.14 on Friday for a 5.4% weekly loss.
The S&P 500 closed 35.40 points, or 1.9%, lower at 1,880.05 and 3.1% lower over the week.
The Dow Jones Industrial Average shed 211.82 points, or 1.3%, to 16,204.83 and was down 1.6% over the week.
The $US rose over Friday’s trading sessions in response to the stronger US wages growth last month (that pushed the $A down 1.9% to 70.60 US cents).
The US dollar fell 2.7% last week though on those concerns about the economy and the strength of growth, although the jobs data got analysts talking about a possible rate rise later this year.
Last week has seen most share markets give up their gains of the previous week.
US shares lost 3.1% last week, Eurozone shares fell 5.1%, Japanese shares fell 4% and Australian shares lost 0.6%.
Chinese shares rose 1% though over the week (but down 0.6% on Friday).
Bond yields declined and commodity prices were mixed with metals up but oil down sharply as supply concerns overcame the weaker greenback.
