Monday blues take markets lower

Stock markets in Europe are in full retreat, with the FTSE 100 down over 100 points, continuing the theme from last Friday.

- Chinese markets close for the week as new year celebrations start

- Randgold Resources remains optimistic better times lie ahead

- HSBC’s domicile decisions expected soon

There will be considerably less chance of any monkey business from Asian markets as China enjoys a week off celebrating the start of a new year with its spring festival. The day’s economic data releases are almost non-existent, with only this morning’s European Sentix investor confidence and this afternoon’s US Labor Market conditions data worthy of note. With so few stimuli to confuse the picture, today should be a day for calmer heads and smoother market conditions. Of course, that would have been the case if the disappointing Sentix figures hadn’t triggered a mid-morning selloff. As the market continues to downgrade the chances of interest rate rises in the US – or anywhere else for that matter – gold has enjoyed a return to favour as its lack of income appears comparatively less of an issue. One cautionary note that should be struck from Friday is the improvement in unemployment and earnings. Should this prove to be more than just a flash in the pan, then FX markets might need to re-asses their interest rate timeline, regardless of the disappointing headline non-farm payrolls figures.

Randgold Resources' figures highlight the issues facing gold miners. The ability to cut operating costs by 3% has been more than wiped out by the falling price . An optimistic outlook for both spot prices and production has given markets every reason to send the shares higher. Although fines for banks have become increasingly scarce they have not disappeared altogether. HSBC has just settled a $470 million fine with US regulators over historical operating procedures with its mortgage business in America. The markets are also anticipating a decision from HSBC’s directors as to where best to be domiciled, the tone appears to have shifted from where it is best to go, to are there any compelling reasons to leave.

Ahead of the open, we expect the Dow Jones to start 216 points lower, at 15,988.