Stocks May See Further Downside In Pre-Holiday Trading - U.S. Commentary

(RTTNews) - Following the sell-off seen in recent sessions, stocks are likely to see further downside 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 122 points.

Recent downward momentum is likely to persist, although trading activity may be subdued ahead of the Christmas Day holiday on Tuesday.

Many traders are likely to remain away from their desks to get a head start on the holiday, as the markets are due to close at 1 pm ET.

Nonetheless, today marks the first day traders will an opportunity to react to the partial government shutdown that took effect at midnight last Friday.

The partial shutdown is likely to continue until after Christmas, as President Donald Trump and Democratic lawmakers remain "far apart" on the issue of funding for the president's controversial border wall.

The Senate adjourned Saturday without a deal to re-open the shut down parts of the federal government and is not expected to reconvene until Thursday, December 27th.

The ongoing shutdown comes after Vice President Mike Pence met with Senate Minority Leader Chuck Schumer, D-N.Y., but a spokesman for the Democratic leader said, "Unfortunately, we're still very far apart."

Senate Majority Leader Mitch McConnell, R-Ken., noted party leaders have pushed the "pause button" on holding votes until Trump and Democrats reach an agreement.

The economic calendar for the week starts off quiet due to the holiday on Tuesday, although reports on new home sales, consumer confidence, and pending home sales may attract attention later in the week.

With the partial government shutdown looming, stocks moved sharply lower over the course of the trading day on Friday. The major averages extended the sell-off seen in recent sessions, once again ending the day at their lowest closing levels in over a year.

The major averages climbed off their lows in late-day trading but still posted steep losses. The Dow slumped 414.23 points or 1.8 percent to 22,445.37, the Nasdaq plummeted 195.41 points or 3 percent to 6,332.99 and the S&P 500 tumbled 50.80 points or 2.1 percent to 2,416.62.

For the week, the Nasdaq nosedived by 8.4 percent, while the S&P 500 and the Dow plunged by 7.1 percent and 6.9 percent, respectively.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Monday, with the Japanese markets closed. China's Shanghai Composite Index rose by 0.4 percent, while Hong Kong's Hang Seng Index fell by 0.4 percent.

Meanwhile, the major European markets moved lower in a holiday-shortened session. The French CAC 40 Index tumbled by 1.5 percent and the U.K.'s FTSE 100 Index fell by 0.5 percent. Markets in Germany were closed on the day.

In commodities trading, crude oil futures are sliding $0.86 to $44.73 a barrel after falling $0.29 to $45.49 a barrel last Friday. Meanwhile, an ounce of gold is trading at $1,265.30, up $7.20 from the previous session's close of $1,258.10. On Friday, gold dropped $9.80.

On the currency front, the U.S. dollar is trading at 110.90 yen compared to the 111.22 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is valued at $1.1405 compared to last Friday's $1.1372.