US open: Markets drop amid falling inflation and continued shock following Swiss National Bank announcement

US stocks were trading in the red on Friday as the effects of yesterday’s Swiss National Bank shock continued.

Early in the day the Dow Jones Industrial Average dropped 0.61% to 17,320.71, the S&P 500 decreased 0.92% to 1,992.67 and Nasdaq declined 1.36% to 4,089.65.

IG analyst Alastair McCaig said: “The initial panic caused by this shock SNB decision slowly turned to optimism as equity markets took this as a further signal that the ECB would embark on its own QE scheme in the near future.

“As volatility has increased, and with US markets are due for a long weekend, it will be interesting to see how resilient traders can be before the desire to reduce exposure and a 'risk-off' mind-set creeps in.”

Connor Campbell from Spreadex added: “One of the big beneficiaries of the SNB currency-cap-removal was gold; the precious metal saw prices leap as it gained back its validity as a safe alternative investment after months of struggling in the face of the US dollar.”

Barclays Research focussed on US inflation: “CPI inflation fell sharply in December, owing to declining energy prices, as well as softness in core goods prices. Headline CPI dropped 0.4% m/m in seasonally adjusted terms, in line with our and consensus expectations.”

“We maintain our view that declining energy prices will drive headline CPI down further in the near term, but its effect will be transitory.”

Oil prices were rebounding slightly with WTI up 1.3% at $46.88 a barrel and Brent increasing 2.3% to $49.42 a barrel.

Over on COMEX, gold futures were advancing 0.21% to $1,267.50 while the dollar was advancing against the yen, the pound and the euro.

The yield on a benchmark US 10-year Treasury grew three basis points to 1.74%.

In the corporate world United States Oil Fund was rising 2.12% as oil prices began to rebound.