European shares are pushing higher on Tuesday and U.S. stock futures point to a positive opening as corporate earnings season gets underway amid a dismal start for stocks in 2016 with tumbling oil and commodity prices, a strong U.S. dollar, and the likely prospect of more U.S. monetary policy tightening in 2016 weighing down investor sentiment.
Signs of yuan stabilization on Tuesday are helping to support a rise in risk taking in the market after the Chinese yuan has already declined one percent against the dollar in 2016, weakened by a recent policy decision by China’s central bank to devalue the yuan in 2016 following a string of economic reports that show China’s economy is cooling.
China’s Shanghai Composite is down 15 percent for the year but was slightly positive for the day. Analysts are left speculating about the type of landing China is heading for in 2016.
Yesterday after the closing bell, aluminum maker Alcoa reported fourth quarter 2015 earnings that revealed a net loss of $500 million, or $0.39 per share with quarterly revenue down 18 percent from the same quarter a year ago.
Alcoa has been hit by the steep drop in commodity prices and a strengthening dollar in 2015 that led to a 25 percent quarterly revenue decline from lower alumina and aluminum prices.
Brent Crude and U.S. Oil (WTI) remain under pressure on Tuesday.
U.S. WTI is hovering slightly above $31 a barrel at $31.21 a barrel.
Brent fell below $31 earlier on Tuesday, reaching a low not seen since 2004 amid a glut in global oil, with demand not keeping pace with supply.
Iran is expected to soon saturate the market with even more crude oil.
Crude oil prices have declined nearly 75 percent since mid 2014.
This week Barclays, Bank of America-Merrill Lynch, Macquarie Research, and Societe Generale all lowered their full year 2016 estimates for crude oil.
Barclays cut their 2016 Brent Crude estimate to $37 from $60 a barrel and WTI to $37 from $56.
Macquarie Research lowered its 2016 estimate to $45 from $58 and WTI to $42 from $53.
U.S. Federal Reserve Chair Stanley Fischer gave a speech in Paris on Tuesday.
Richmond Fed Reserve Bank of Richmond Jeffrey Lacker is scheduled to give a speech in the afternoon.
President Obama will be making his final State of the Union speech later this evening.