US pre-open: Shares drop amid mixed data on economy and prices

Stock futures were pointing to a sharply lower open on Wednesday amid reports of larger-than-estimated capital outflows from China and another slide in oil futures, amid mixed data on economic activity and prices.

“The [Fed] decision to move on the expectation that inflation will follow was seen as a risky move by many and we have to assume that if the data doesn’t follow, then the path of rates will be slower than the central bank is currently planning,” Craig Erlam, senior market analyst at Oanda said before the release of the data.

As of 13:03 GMT S&P 500 mini futures were down 33.75 points to 1,839.25 and the Dow Jones mini was 298.0 points lower at 15,615.0.

Net capital outflows to emerging markets went into reverse in 2015 because of China, the Institute for International Finance said in a report on Wednesday.

It was the first instance of net capital flight since 1988, with the IIF pegging the total drain at $735bn, easily outpacing the $540bn projected by the same research outfit back in October. All but $59bn of that amount exited China.

Going in the other direction, Bank of America-Merrill Lynch reportedly stated on Wednesday that hedge-funds were injecting the most funds into equities since at least 2010, based on the broker’s own data for client flows.

Overnight, the Footsie and Honk Kong’s H’-shares index neared so-called bear-market territory as losses for both gauges approached 20% from their most recent highs.

A bear market is when the price of an asset drops 20% from its peak.

Consumer prices miss forecasts

US consumer prices undershot market expectations, with fresh data from the Bureau of Labor Statistics revealing that headline consumer price inflation slipped by a tenth of a percentage point to 0.7% year-on-year in December, versus consensus of 0.8%.

Core inflation on the other hand advanced by 2.1% year-on-year, as anticipated.

US housing starts were wide of the mark, falling by 2.5% month-on-month in the same month, although a better than expected print of 1.232m permits acted as an offset.

Oil at fresh 12-year lows, below $28 on NYMEX

Prompt-month West Texas Intermediate crude futures were 2.85% lower on the NYMEX, at fresh 12-year lows.

Goldman trades lower, Barclays cuts target on ‘Big Blue’

In company news, shares in Goldman Sachs slipped 2.4% before the opening bell after the bank reported fourth quarter net profits of $765m or $1.27 per share, after taking a hit from a $5.1bn legal settlement with authorities linked to the mortgage-backed securities it sold in the lead-up to the financial crisis.

Credit Suisse initiated coverage of biotech outfits Amgen and Biogen at ‘outperform’ with target prices of $205 and $322 each, respectively.

Over at Barclays, analysts slashed their target on shares of IBM from $146 to $125.