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Stock futures slide ahead of Tuesday’s open, following further fallout from China’s regulatory tightening, which drove Hong Kong’s Hang Seng HSI index,
at its lowest since November 4, 2020.
Of course, the Hang Seng also fell 4% on Monday and the US stock indexes closed at record highs.
Whether or not investors should be worried about what’s going on in the world’s second-largest economy may depend on a few questions, Sven Henrich, founder of NorthmanTrader.com, told MarketWatch: “Are they [China] concerned about an asset bubble and letting the air escape before it bursts and does more damage? Or are they the canary that says the recovery has already peaked? Or both? We are wondering. If either of these is true, then US stocks are in danger of overflowing. ”
This brings us to our call of the day from The Market Ear blog, which details some potential risks to the markets and one possibility – large investors affected by the fallout from China might end up being less willing to take risks elsewhere.
“The stress we see in Chinese technology is now spreading to other sectors. Admittedly, for now it is a local problem, but it could potentially become a global problem, and therefore mainly because of the risks in terms of P&L [profit and loss]. The loss in value is significant and the pain is felt globally, ”the blog said.
For example, holders of Tencent 700,
– down 8% on Monday and 7% on Tuesday – are predominantly non-Chinese, as the holdings show:
FactSet Search
Then there is Alibaba 9988,
which lost 6% on Monday and the same Tuesday.
“The biggest holder of BABA is Softbank 9434,
This is a long term investment, but we all know that when you lose big money in one “trade” you are not too happy to take more risk in other areas. There’s also the possible effect that plummeting asset losses are “funded” by selling profits (a mistake too many people still engage in), ”the Market Ear blog said.
FactSet Search
“The last casualty last week was the edtech industry. Top 10 holders of TAL Education TAL,
are all western names. You get the point. Losses are not just a local problem. And we wouldn’t be surprised to see some hedge funds report large losses for the month of July. With movements like these, there is most of the time blood in the water, ”the blogger said.
Market Ear ends with a little history lesson on a boom in Chinese stocks that began in mid-2014 and ended in a massive crash in 2015.
“During the first phase of the sale, it was considered that a Chinese stock market bubble was imploding. Some 2.5 months later, the [S&P 500] decided to care and the developed markets threw up big as the second phase of selling Chinese stocks resumed, ”the blogger said.
Prepare for big technological gains
The tech giant’s results are expected after the close as Apple AAPL,
Google GOOGL parent alphabet,
and Microsoft MSFT,
report the results.
Read: Amazon reports after Thursday’s close. Here’s what to expect
Profits are rolling, with medical device maker Boston Scientific BSX,
returning at a profit, the United Parcel Service UPS parcel shipper,
reporting encouraging results, while among the conglomerates, 3M MMM,
raised its outlook and GE GE,
posted a beating of income. Chipmaker Advanced Micro Devices AMD,
and Starbucks SBUX coffee maker,
also arrive after closing.
Tesla TSLA,
profit topped $ 1 billion for the first time in the electric carmaker’s history, and sales nearly doubled, exceeding expectations, although chief executive Elon Musk noted a “severe” shortage of chips was cutting production and had delayed his commercial truck.
Intel INTC,
shares are dropping after the chipmaker unveiled a production schedule stretching to 2025.
Along with the kick-off of the two-day Federal Reserve meeting on Tuesday, data will be provided, including durable goods orders, the S&P Case-Shiller housing price index, the consumer confidence survey. Conference Board consumers and vacant housing.
Read: How the 10-year Treasury rate and the S&P 500 performed when the Fed cut in 2013
On the COVID-19 front, US officials have issued a “do not travel” order for Spain and Portugal, citing high infection levels.
The steps
Dow YM00 futures contracts,
are down by more than 100 points, with those of the S&P 500 ES00,
and Nasdaq-100 NQ00,
were also softer. Bitcoin BTCUSD,
gave up some of its weekend earnings after Amazon reportedly denied plans to accept cryptocurrencies by year-end, speculation fueled by a digital-themed job posting.
Table
The results of Deutsche Bank’s monthly market sentiment survey in July included a lot of information about how people think about COVID-19 rules. The following reveals that many believe that airlines, nightclubs, and any gathering of large crowds should ask for vaccination certificates.
Random readings
Ernest Hemingway lookalike winner crowned at Sloppy Joe’s Bar in Florida.
Weightlifter Hidilyn Diaz wins gold for the Philippines, her country’s first in 97 years. She will also get a house and 10 million pesos.
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