Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

U.S. Opening Bell: Futures, Stocks Cautiously Up Amid China Crackdown; Gold Slumps

By Investing.com (Pinchas Cohen/Investing.com)Market OverviewAug 03, 2021 10:18
uk.investing.com/analysis/opening-bell-futures-stocks-cautiously-up-amid-china-crackdown-gold-slumps-200490547
U.S. Opening Bell: Futures, Stocks Cautiously Up Amid China Crackdown; Gold Slumps
By Investing.com (Pinchas Cohen/Investing.com)   |  Aug 03, 2021 10:18
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
  • Investors nervous Chinese policymakers will extend regulatory crackdowns
  • As such, China tech giants selloff sharply
  • Real yields hit record low

Key Events

US futures on the Dow, S&P, NASDAQ and Russell 2000 as well as global stocks all traded slightly higher on Tuesday, despite tightening Chinese regulations provoking the sharpest monthly selloff in China-linked American Depository Receipts (ADRs) on Monday since the peak of the 2008 financial crisis.

Gold traded lower despite a slide in the dollar.

Global Financial Affairs

All four US index futures were in the green, though a comparison between them shows a reversal from yesterday’s leaders and laggards. Contracts on the Russell 2000 were up 0.7%, along with Dow Jones futures, up 0.5%—both indices represent value shares. Conversely, futures on the NASDAQ 100 lagged, only 0.2% higher. Today’s picture is of the reflation trade, while yesterday closed with cyclical shares in reversal, while technology stocks—which enjoy demand irrespective to economic growth—outperformed.

Similarly, in Europe, the STOXX 600 Index’s biggest losers today have been technology stocks. Dutch internet investment group Prosus (AS:PRX) sold off as much as 6.2% after China's megacap internet company Tencent (HK:0700) dropped as much as 10.5% but settled down 6.1%, its lowest level since June 15, 2020 on concerns that local regulators will come after online entertainment next.

Officials in the Asian nation also looked into auto chip distributors, as there were concerns of price-gouging which sent shockwaves across the sector. German semiconductor company Infineon (DE:IFXGn) disappointed on profits, citing US storms and shutdowns as hurting sales.

The energy sector, however, received a boost after BP (LON:BP) joined other oil giants in increasing dividends and initiating share buybacks, due to the higher prices it enjoyed along with higher quarterly crude prices.

Beware, however, that BP’s rise could prove temporary.

BP Daily
BP Daily

The current rally trades along a rising flag—presumed bearish after the preceding 11% plunge in 5 sessions, after having fallen below the uptrend line. The pattern is complete upon a decisive downside breakdown.

Despite the aforementioned quarterly gains for oil, crude held a decline amid the persistent spread of the coronavirus and signs of a muted Chinese recovery which hit demand.

Oil Daily
Oil Daily

Monday’s 3.6% selloff of the commodity wiped away more than 4 days of progress, and the price has been struggling to find its footing above the 50 DMA. If oil continues lower, below the 100 DMA, then the July 20 low, which has provided support as an uptrend line, will have established a peak-trough downside formation for prices.

Earlier, Asian shares fell as the relentless spread of the Delta strain of COVID-19 increased in key markets. Monday's selloff on Wall Street did not help sentiment.

Japan’s Nikkei 225 and China’s Shanghai Composite both fell 0.5%, after Chinese media characterized online gaming as “spiritual opium,” though later it removed the report, as the government apparently wished not to exacerbate already nervous investors on regulatory clampdowns.

The New Zealand dollar rose on speculation of tightening policy, but technicals are signaling the NZD won't rally.

NZD/USD Daily
NZD/USD Daily

The US dollar has been rising against NZD within an ascending triangle, which, coupled with a Golden Cross, after the 50 DMA crossed above the 100 DMA, primes the greenback for an upside breakout and a continued rally against the New Zealand dollar.

The Australian dollar jumped too, after policymakers stayed true to their bond tapering plan despite the ongoing Delta-variant lockdown in Sydney.

But, again, supply-and-demand are geared to push the Aussie back down.

AUD Daily
AUD Daily

The AUD/USD pair appears to be trading within a rising flag, presumed bearish after a 2.7% plunge in four days. A downside breakout will confirm a continued downtrend, signaled by the death cross.

Yields on the 10-year Treasury note appeared to find their footing at 1.190, finding support at July lows, after closing yesterday at the lowest level since early February.

10-year Treasuries Daily
10-year Treasuries Daily

However, the impending Death Cross encapsulates the exponential drop in yields, as seen by the continuously faster falling channel. Moreover, real rates fell to a record low, as investors don’t expect rates to rise in the near future, after US manufacturing weakened, compounding fears that the virus will hurt the country’s expansion.

The dollar edged lower for the second day, ranging since last week’s four-day selloff.

Dollar Index Daily
Dollar Index Daily

The Golden Cross—as the 50 DMA crossed over the 100 DMA, demonstrating relatively improving pricing—supports the rally, which, if it moves above 94, would bottom. This would likely be on fresh hopes for that the strong economic recovery investors have been hoping for, would force the US Federal Reserve into policy tightening despite its current rhetoric.

Gold fell even though the dollar was weaker.

Gold Daily
Gold Daily

After completing a return move that successfully retested the bearish wedge, the price of the precious metal is primed to form a small double-top, which would send the yellow metal even lower.

Bitcoin sold off for the fourth straight day as the new US Securities and Exchange Commission Chairman, Gary Gensler, asked Congress to authorise him to monitor crypto exchanges. Gensler said he’s not a fan of the extremely volatile unregulated market, nor does he have any plans for a Bitcoin ETF.

Bitcoin Daily
Bitcoin Daily

Bitcoin’s drop took its price back below the neckline of a would-be bottom, cutting through the 100 DMA—whose breeching was recently celebrated by the financial media. The digital token attempted to climb back above it, but was rejected.

Up Ahead

  • The earnings season continues with Uber (NYSE:UBER) reporting on Wednesday.
  • The Bank of England is expected to keep its benchmark interest rate and its bond-buying target unchanged on Thursday.
  • Friday's US jobs report is expected to show another robust month of hiring.

Market Moves

Stocks

  • The FTSE 100 Index increased 0.3%
  • The STOXX 600 rose 0.1%
  • Futures on the S&P 500 climbed 0.3%
  • Futures on the NASDAQ 100 advanced 0.2%
  • Futures on the Dow Jones Industrial Average added 0.3%
  • The MSCI Asia Pacific Index was little changed
  • The MSCI Emerging Markets Index was little changed

Currencies

  • The British pound rose 0.2% to $1.3906
  • The Dollar Index fell 0.1%
  • The euro was little changed at $1.1879
  • The Japanese yen rose 0.2% to 109.10 per dollar
  • The offshore yuan was little changed at 6.4653 per dollar

Bonds

  • Britain’s 10-year yield was little changed at 0.53%
  • The yield on 10-year Treasuries was little changed at 1.17%
  • Germany’s 10-year yield was little changed at -0.48%

Commodities

U.S. Opening Bell: Futures, Stocks Cautiously Up Amid China Crackdown; Gold Slumps
 

Related Articles

Neil Wilson
Travel Stocks Lead Gains In Europe By Neil Wilson - Sep 17, 2021

European markets on a firmer footing on Friday – FTSE 100 made a bold move at the open to recapture the week’s intraday high at 7,093 struck on Monday before pulling back, still...

U.S. Opening Bell: Futures, Stocks Cautiously Up Amid China Crackdown; Gold Slumps

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email