Bloomberg Business
-China stops rout: China’s CSI 300 Index closed 0.3 percent higher after falls of more than 2 percent were erased in a late-session rally. According to people familiar with the matter, state-controlled funds bought equities and the securities regulator signaled that a selling ban for major investors which was due to expire this week may be extended. The People’s Bank of China injected 130 billion yuan ($19.9 billion) of seven-day money into the economy using reverse repos, the largest amount since September. The yuan rebounded from a five-year low.
-Oil: This time it’s different. As Middle-East tensions rise, the price of oil is going nowhere. West Texas Intermediate for February delivery dropped 2 cents to $36.74 a barrel on the New York Mercantile Exchange at 10:58 a.m. London time. With no relief in sight for oil exporting nations, there may be more bad news from the bond market as they try to plug holes in their budgets with Mashreq Capital DIFC Ltd. predicting Gulf states will soon be paying an extra 50 to 100 basis points above current yields to sell bonds.
-Euro-area inflation: Euro-area inflation for December was weaker than economists expected, rising an annual 0.2 percent. The euro fell 0.5 percent to $1.0763 at 11:15 a.m. London time. Stubbornly low inflation in the common currency area may add pressure on the European Central Bank to act further as the ECB’s 2 percent target seems as distant as ever.
-German, Spanish unemployment: Although inflation remains muted, unemployment in both Spain and Germany fell more than expected according to figures released this morning. In Spain social security sign-ups – a measure of new staff hiring – rose by 85,314, the biggest increase on record and in Germany the unemployment rate remained at 6.3 percent, the lowest since reunification.
-VW sued by U.S., auto sales due: The Justice Department sued Volkswagen AG in relation to the emissions-test cheating devices the company installed in its diesel cars. Volkswagen shares were 5.7 percent lower at 11:15 a.m. London time. Also in U.S. auto news, domestic vehicle sales for December are due to be released later today, with expectations for total sales of 18 million vehicles, a small drop from November’s 18.05 million.
CNN Money
-Stock market movers — VW, Coach, Juniper Networks, Southwestern Energy, Tesco: Volkswagen (VLKAF) shares fell by more than 4% in early trading after it was sued by the U.S. government over rigging emissions tests on diesel cars. This suit alone could lead to fines of around $18 billion. Shares of American design label Coach (COH) were 2.5% higher in aftermarket trade Monday following an upgrade, and Juniper Networks (JNPR) was also up more than 2%. Southwestern Energy (SWN), on the other hand, was down more than 2%. Tesco (TESO), one of the world’s biggest retailers, jumped more than 4% in early London trading after an upgrade by Deutsche Bank.
-Earnings and economics: U.S. auto sales for December will reveal what a bumper year it was for automakers. The Institute of Supply Management is due to post its economic activity index for January at 10 am ET.
-Monday market recap: The Dow Jones industrial average shed 1.6%, while the S&P 500 dipped 1.5% and the Nasdaq dropped 2.1%.
-Investors should focus on China’s economy, not stocks: China stocks kicked off 2016 with one of their signature moves: A severe and unexpected plunge that rattled investors. The 7% drop was so intense that market circuit breakers — designed to stem rapid declines — were triggered for the first time. But there are some important reasons not to panic: China’s stock market reveals very little about the health of the country’s economy — it’s dominated by small savers who put more faith in speculative investing newsletters than economic fundamentals. «In many countries the stock market can be seen as a leading indicator of the economy. But that is not true in China,» wrote Jeffrey Kleintop, chief global investment strategist at Charles Schwab. «You really can’t get any less related than the Chinese stock market and its economy.» Other analysts say Monday’s sharp fall was more about Beijing’s muddled management than a deceleration in activity, even if a weak manufacturing survey may have triggered the selling.