US pre-open: New York set for plunge on China data and oil price falls

USstocks look set to pullback hard at open on disappointment over the latest Chinese industrial production data and a further slump in oil prices.

Mid-morning, CMC Markets saw S&P 500 opening 5 points lower at 2,030, with Dow Jones 35 points lower to 17,561. Tech-heavy Nasdaq is seen giving up 13 points to 4,233.

Just an hour before open, though, CNN's futures reading were indicating Dow would plunge 105 points to 17,404, with S&P off 11.25 points to 2012.

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As with European markets this morning, weaker than expected industrial production data for China overnight looks set to undermine confidence in New York stocks.

The oil price is set to be another big drag on sentiment after crude-oil futures extending losses in European trade, with the US oil benchmark dipping below $59 a barrel after the International Energy Agency cut its outlook for global oil demand.

Marketwatch reports that ANZ Research analysts have further cut their oil-price forecasts for 2015 by an average of 24%. They now expect Nymex crude to average $68 a barrel, and Brent crude to average $71 a barrel over the next year.

Jasper Lawler, CMC's market analyst, says that an opening retreat by US stocks today would build on a late, big reversal yesterday that saw Dow slide over 150 points from gains made after retail sales data improved in November as fears of a US government shutdown intensified. As it has turned out the shutdown has been averted, with Congress at the last minute approving a $1.1trillion spending bill, providing some relief for markets.

More broadly, Lawler notes that an annual decline in Black Friday sales in the US had diminished hopes the consumer had been revived by lower prices at the pump before the Thanksgiving holiday shopping season.

But the strength of the November retail sales data yesterday, as well as the decade high auto sales, suggests to Lawler that the Black Friday showing was driven by shopping habits shifting online rather than a weak consumer.

He adds: "Lower oil prices are just like a tax-cut for consumers so the expectation is that some of that wealth affect will be spent. There is typically a lag between when petrol prices fall to when people start to feel richer; November's retail sales is the first major sign that the oil price declines from June are having an impact."

Retailers were some of the biggest gainers yesterday with Urban Outfitters rallying over 7% and Staples and Office Depot getting a double lift from an activist investor stake in both possibly paving the way for a merger of the two office supply giants.

However, the promising retail data presents a double-edged sword: "The trouble is that when markets are largely driven by liquidity, the good news about the US economy is decreasing the timetable for how long that liquidity will last.

"Whether the good unemployment, wage and retail sales data has impacted Fed timing for a rate-hike will be indicated next week in its decision whether to remove the "considerable time" language from its statement."