Investing.com - Here are the top five things you need to know in financial markets on Monday, December 28:
1. Oil ticks lower after last week's sizable gains
Oil prices fell sharply on Monday, as last week's strong rally came to a halt. U.S. crude futures were down 83 cents, or 2.17%, at $37.27 a barrel at 6:23AM ET, after rallying 9.7%, last week, the biggest weekly gain since early October.
Internationally traded Brent futures lost 78 cents, or 2.07%, to $37.11. The global benchmark increased 2.74%, last week, snapping a three-week losing streak.
Meanwhile, the WTI crude contract maintained its slim premium over Brent. U.S. crude has been firmer relative to Brent recently, on signs that the U.S. oil market is likely to grow tighter, while a global glut gets worse in 2016.
2. Global stocks decline in thin trade
Global stock markets edged lower in low-volume trade on Monday, as falling oil prices weighed on sentiment on the first day of the final trading week of 2015.
Major Asian equities closed mostly lower, with Japan's Nikkei advancing, while shares in China fell the most in a month amid signs officials are worried about capital flight as the economy slows.
Meanwhile, European stocks were mildly lower, as trading volumes were expected to remain thin ahead of the New Year holiday. Markets in the U.K. remained closed for Boxing Day.
Elsewhere, U.S. stock futures were down between 0.2% and 0.3% after the long Christmas weekend, suggesting a weak open on Wall Street later in the day. U.S. financial markets closed early on Thursday, Christmas Eve, and remained shut for Christmas Day on Friday.
Heading into the final week of the year, trading volumes are expected to remain light as many traders already closed books due to the holiday period, reducing liquidity in the market and increasing volatility.
3. U.S. dollar drifts lower
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.15% at 97.87 on Monday.
The index has fallen back to levels seen before the Federal Reserve raised interest rates on December 17 as investors booked profits on their bullish dollar bets before the end of the year.
The dollar slid against the euro, with EUR/USD gaining 0.24% to 1.0989. Against the yen, the greenback inched up 0.19% to 120.51 (USD/JPY).
With the first U.S. rate hike since 2006 out of the way, the focus is now on the pace of future rate increases. The Federal Reserve, from its forecasts, is anticipating four rate hikes next year. However, the Fed funds futures currently suggests there will be just two rate increases, one in June and one in December.
4. Gold inches down in post-Christmas trade
Gold drifted lower on Monday after the long Christmas weekend, as investors kept an eye on upcoming U.S. data to gauge if the world's largest economy is strong enough to withstand further rate hikes in 2016.
The U.S. is to release key reports on consumer confidence, pending home sales and jobless claims later this week, as market players look for further indications on the strength of the economy and the future path of U.S. rate hikes. Mixed U.S. economic reports released last week failed to offer clues as to how fast the U.S. central bank will raise interest rates next year.
5. Russian economy contracts 4.0%
Russia's gross domestic product shrank 4.0% on the year in November, according to the Economy Ministry, taking the annual decline for the January-November period to 3.7%.
Russia's economy appears likely to contract further in 2016, given the recent drop in oil prices and fresh economic sanctions.