With the debt drama in Greece as well as poor trade data out of China, U.S. stocks ended the volatile trading session on Monday with modest losses. While increasing oil prices initially boosted energy stocks, when the CBOE volatility index rose to 18.70, this was a clear indication of the concern among investors regarding deterioration in earnings expectations due to the rising U.S. dollar (USD) as well as deflation fears. Meanwhile in Greece, Alexis Tsipras, the Prime Minister dismissed the country’s European Union and International Monetary Fund bailouts and stated that he would request an extension from EU leaders. Greece has until the 16th of February to make this request. Analysts have commented that it is only a matter of time before Greece leaves the eurozone. Elsewhere in China, data showed that imports in January had declined more than 19% while exports declined 3.3 percent. At the close of trading, the Dow Jones Industrial Average (DJIA) fell 0.5%, or 95.08 points, to 17,729.21, while the S&P 500 index (SPX) closed down 0.4 percent, or 8.73 points, to 2,046.74. Also on the downside was the Nasdaq Composite index (COMP) which declined 0.4%, or 18.39 points, to 4,726.01.
On Tuesday, the Australian dollar (AUD) gained. This came after data showed moderate business conditions and housing in the country as well as home weak prices in China while investors hope that Beijing will ease monetary policy further. The AUD/USD traded up 0.22 percent at 0.7820 while the USD/JPY traded down 0.16 percent at 118.45. China reported that the CPI in January increased 0.8 percent. This was below expectations year-on-year for 1.0%, while PPI data declined 4.4 percent marking the steepest drop since October 2009. Meanwhile in Australia, the house price index rose 1.9% quarter-on-quarter for the fourth quarter. This was in line with the Reserve Bank lowering the cash rate to a record low 2.25% last week. Also, Australia’s NAB's business confidence and business conditions for January showed plus-2 for conditions. This was unchanged from last month. Meanwhile, from plus-2 in December, confidence came in at plus-3 for January. Elsewhere, the U.S. dollar index was at 94.64, down 0.06 percent.
On Tuesday, Coca-Cola (KO, -0.53%) will report their fourth-quarter results. Analysts will be focusing on soda sales as well as the performance of Fairlife milk. This milk, which is lactose free, came about after a partnership in 2012 between the beverage giant and a group of family owned dairy farms. Coca-Cola also introduced the sale of energy drinks, water and tea around the same time in order to compensate for declining juice and soda sales. According to analysts, Coca-Cola is expected to report earnings of 42 cents a share which is down from 46 cents a share a year earlier. In terms of revenue, Coca-Cola is expected to report a decline in total sales from $11 billion a year ago to $10.8 billion for the fourth quarter. J.P. Morgan analysts expect to see a 2 percent decline in volume in Europe as well as a 1% rise in both North America and Latin America and a 4% rise in Africa and Eurasia. This year, Coca-Cola shares have declined 3 percent compared to its rival PepsiCo Inc. (PEP, -0.77%) which has increased 1.3 percent since the start of the year.
Crude oil prices have not been able to catch a break and on Tuesday, Brent crude oil prices remained below $58 a barrel. According to the IEA (International Energy Agency), the U.S. will remain the world's top source of oil supply growth until to 2020. This comment goes against all expectations for a slowdown in shale output growth. Ending a 3-day rally, Brent crude dropped 1.22%, or 71 cents, to trade at $57.63 a barrel. Last week, this benchmark gained more than 9%, marking its largest weekly rise since February 2011. Meanwhile, U.S. crude futures also traded down on Tuesday, declining 65 cents to trade at $52.21 a barrel. This came after a preliminary survey showed that commercial crude stockpiles in the U.S. hit a record high last week.