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Stocks May Come Under Pressure In Early Trading - U.S. Commentary


Following the strong upward move seen last week, stocks are likely to come under pressure in early trading on Monday. The major index futures are currently pointing to a lower open for the markets, with the Dow futures down by 169 points.

Concerns about the global economic outlook are likely to lead to early weakness following the release of disappointing Chinese trade data.

Data from China's General Administration of Customs showed exports tumbled by 4.4 percent year-over-year in December, reflecting the biggest drop in two years. Economists had expected exports to increase by 3 percent.

The report also said Chinese imports plunged by 7.6 percent in December compared to the same month a year ago, defying expectations for a 5 percent jump.

ING Greater China Economist Iris Pang said the contraction in Chinese imports and exports "is likely to continue into 2019 due to falling foreign demand, including demand for Chinese-made electronic products."

A negative reaction to quarterly results from Citigroup (C) may also weigh on the markets, as the financial giant reported fourth quarter earnings that exceeded analyst estimates but on weaker than expected revenues.

Financial giants JPMorgan Chase (JPM), Wells Fargo (WFC), Bank of America (BAC), and Goldman Sachs (GS) are also due to report their quarterly results in the coming days.

After initially moving to the downside, stocks once again staged a recovery attempt over the course of the trading session on Friday. The major averages climbed well off worst levels of the day session but still closed slightly lower.

While the Nasdaq fell 14.59 points or 0.2 percent to 6,971.48, the Dow and the S&P 500 both edged down by less than a tenth of a percent. The Dow dipped 5.97 points to 23,995.95 and the S&P 500 slipped 0.38 points to 2,596.26.

Despite the modestly lower close on the day, the major averages moved significantly higher for the week. The Nasdaq surged up by 3.5 percent, while the Dow and the S&P 500 jumped by 2.4 percent and 2.5 percent, respectively.

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Monday, with the Japanese markets closed for a holiday. China's Shanghai Composite Index slid by 0.7 percent, while Hong Kong's Hang Seng Index plunged by 1.4 percent.

The major European markets have also moved to the downside on the day. While the U.K.'s FTSE 100 Index has slumped by 1 percent, the French CAC 40 Index and the German DAX Index are down by 0.7 percent and 0.6 percent, respectively.

In commodities trading, crude oil futures are falling $0.70 to $50.89 a barrel after sliding $1 to $51.59 a barrel last Friday. Meanwhile, an ounce of gold is trading at $1,290.80, up $1.30 from the previous session's close of $1,289.50. On Friday, gold rose $2.10.

On the currency front, the U.S. dollar is trading at 108.20 yen compared to the 108.48 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is valued at $1.1457 compared to last Friday's $1.1469.

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