Investors put the squeeze on stocks, Bitcoin ahead of a monster earnings day for Big Tech
After leading a five-day rally that took the three big U.S. market indexes to record highs, investors are taking a pre-market breather ahead of a day of Really Big Tech earnings reports.
European markets are also having the proverbial “more buyers than sellers” experience in early trading, as earnings, Delta COVID-19, and extremely frightening weather (floods in the north, fires in the south) leave their mark, though both sides of the Atlantic could well make a risk-on comeback as earnings roll in later. Companies representing a quarter of the S&P 500 market capitalization have reported so far, and 87% have beaten earnings estimates—on aggregate, by around 20%, UBS said in a morning note.
But with the trading day closed, Asia’s markets—China’s, specifically—are down for the count (at least for today), as investors react to Beijing’s ever expanding crackdown (AKA “regulation”) of the technology sector moving from education to food delivery.
Bitcoin too is having a bout of the sads, dropping from a brief peak about $40,000 after Amazon said that, no, despite a media report to the contrary, the e-commerce behemoth was not planning to accept the cryptocurrency for payment by the end of the year.
Now let’s see what’s moving markets.
- The major Asia indexes have stumbled for their second day in a row with the Hang Seng dropping 4.22%. Over the last two days the Hong Kong bourse has fallen over 8% as regulatory fears dampen the mood in China’s tech and education sectors.
- There was a major sell-off of Chinese of tech stocks with Tencent down 9%, Alibaba down 6.4%, and Meituan falling a staggering 17.66%.
- Mainland Chinese stocks didn’t fare very well either. The Shanghai Composite was down 2.49% by close of play.
- Official data released today showed that profits at China’s industrial firms were up by 20% year-over-year in June—good news, on first glance, though the growth pales in comparison to the 36.4% increase they saw the previous month.
- The European bourses stumbled out the gate this morning despite high earning results, with the Stoxx Europe 600 down as much as 0.85% in early trading before clawing back some of the losses by mid morning.
- Shares in British consumer goods company Rekkit Benckiser fell by 8.9% this morning after it missed second quarter sales expectations, squeezed by rising commodity costs and slow demand.
- Bank of England policymaker Gerhan Vlieghe made dovish recommendations about keeping monetary stimulus the same for several quarters, noting the inflation was only temporary.
- Earnings came in for European car companies, and investors weren’t thrilled. BMW, Daimler, Porsche, as well as car parts maker Faurecia were all down between 1.4% and 1.8% in early trading.
- U.S. futures have been slumping all morning. After a strong five-day rally brought them to record highs yesterday, the Big Three indexes are taking a quick breather, falling around half a percentage point.
- Big Tech, including Apple, Microsoft and Alphabet are slated to post their second quarter earnings, which are expected to give a happy kick to the market. Other earnings coming out today include Starbucks, Visa, UPS, General Electric, and JetBlue.
- Shares in Tesla rose around 1% in post market trading after a 2.2% rise over the day. Robust demand domestically and abroad led to better than expected second quarter results, but the company still warned port congestion and the semiconductor shortage could impact future earnings. Elon Musk’s automaker also wrote down $23 million on its Bitcoin holdings, but investors didn’t stress.
- Gold is down a smidge, trading just below $1,800/ounce.
- The dollar is up a wee bit.
- Crude is up with Brent just short of $75/barrel.
- Coffee prices are up 10% in a day and 34% over the last week, spurred by frosts and freezes in Brazil. Deutsche Bank notes that the Bloomberg Commodity Spot Index is closing in on its highest level in a decade, but the coffee addict in us worries more about the chill in Brazil.
- Bitcoin ever-so-briefly crossed the $40,000 yesterday after a report in a London business paper quoted an insider saying that Amazon was eager to start taking the cryptocurrency as a payment method by the end of the year. Turns out that’s not in the offing (for now). ”The speculation that has ensued around our specific plans for cryptocurrencies is not true,” a spokesperson from Amazon told Reuters.
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