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

Opening Bell: China Tech Clampdown Weighs On Futures, Stocks; Gold Rallies

By Investing.com (Pinchas Cohen/Investing.com)Market OverviewJul 26, 2021 09:32AM ET
www.investing.com/analysis/opening-bell-china-tech-clampdown-weighs-on-futures-stocks-gold-rallies-200593568
Opening Bell: China Tech Clampdown Weighs On Futures, Stocks; Gold Rallies
By Investing.com (Pinchas Cohen/Investing.com)   |  Jul 26, 2021 09:32AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
  • China hits education technology sector with new regulations
  • Busiest US earnings week and Fed interest rate decision on tap
  • Bitcoin surges to near $40,000

Key Events

A global selloff after China tightened regulations in the local for-profit education technology sector was exacerbated by the rise of global COVID cases, pushing futures lower on the Dow, S&P, NASDAQ and Russell 2000 in pre-US open trading on Monday. This week will also be the busiest earnings week in the US market, plus on Wednesday the Fed is set to release its interest rate decision.

Oil continued to weaken as markets are concerned about future demand. Yields continue dropping.

Global Financial Affairs

A glance at US futures paints a clear picture of market sentiment. Both value and growth stocks are down, suggesting traders on both sides of the reflation trade are pessimistic.

In Europe, the STOXX 600 Index was lower as a direct results of China's latest crackdown, as well as the ongoing spread of the coronavirus across the globe. Prosus (AS:PRX), the Dutch technology investor that owns 28.9% of Chinese internet mammoth Tencent (HK:0700) plummeted 8.5% as China’s clampdown on the tech industry intensified.

Automobile makers—a victim of the stay-at-home environment—were under pressure. Porsche (F:PSHG_p) declined 4.5% as the stock turned ex-dividend and Faurecia (PA:EPED), the French car parts producer, slid 4.3%, even though the company increased its 2021 net cash flow target.

The one bright spot in the travel sector was Ryanair (LON:RYA), Europe’s largest low-cost carrier, which topped the pan-European index with a 4% jump, after it raised its sales outlook on strong summer bookings.

China’s regulatory eye roamed over the country's expanding technology sector, particularly the for-profit education sector that has ballooned into a $100 billion industry as the government of the People's Republic of China said education has been “hijacked by capital."

When markets in the world’s second-largest economy’s sell off, it affects the rest of the world. So indices in Asia declined and European shares followed, taking US futures along for the ride.

In the Asia Pacific region, the increase in cases of COVID in Sydney—which will not be helped by the defiant anti-lockdown protests there—are due in part to the low vaccination rate in the country. But global cases have also been accelerating, with figures increasing the most in two months due to the Delta strain. The variant is also surging in the US where the top infectious disease expert, Anthony Fauci warned the country is “moving in the wrong direction,” with not even half of America’s population fully vaccinated.

At the Olympic Games in Tokyo the news on the virus is growing worse, further dampening morale, so much so that some are asking, “will we ever be able to travel with young kids?” Despite this, the Nikkei 225 was the only regional index in the green, more than a percentage point higher. Hong Kong’s Hang Seng plunged 3.9% on a panicked selloff after the news from China.

Against this backdrop, we are about to see the busiest earnings week in the quarter, with big names including the likes of Tesla (NASDAQ:TSLA), Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT). Investors will also be closely examining the fine details and language of the Federal Reserves interest rate decision.

Yields on the 10-year Treasury note, which surged in the first half of the year, have resumed their decline.

10-year Treasuries Daily
10-year Treasuries Daily

Rates will test the powerful hammer of June 20, after falling below the 200 DMA, pulling down the 50 DMA to a possible Death Cross. Meanwhile, the 50- and 100-week MAs are joining forces to support last Tuesday’s hammer.

The dollar followed yields lower.

Dollar Index Daily
Dollar Index Daily

Just after the 50 DMA crossed over the 200 DMA, it triggered a Golden Cross, ahead of a potential double-bottom completion.

The dollar emboldened gold bulls, pushing the yellow metal to its highest in a week, having found support by the 100 DMA.

Gold Daily
Gold Daily

However, we consider this rise to be temporary, after having completed a bearish wedge.

Bitcoin surged as much as 12.1%, the most since June 9.

The digital coin neared $40,000 for the first time since mid-June, adding $114 billion to the cryptocurrency's market cap. Market chatter claims the move came amid short covering over speculation that Amazon (NASDAQ:AMZN) will start accepting the cryptocurrency. The move broke our last trade wide open

Oil continued its selloff as the Delta strain once again clouded the demand outlook.

Oil Daily
Oil Daily

The resistance by the neckline of a small H&S top suggests perhaps the recent leg down was the first of what may be a second, though the trend remains higher.

Up Ahead

Market Moves

Stocks

  • The STOXX 600 fell 0.4%
  • Futures on the S&P 500 fell 0.4%
  • Futures on the NASDAQ 100 fell 0.2%
  • Futures on the Dow Jones Industrial Average fell 0.6%
  • The MSCI Asia Pacific Index fell 1%
  • The MSCI Emerging Markets Index fell 2.1%

Currencies

  • The Dollar Index was little changed
  • The euro was little changed at $1.1779
  • The Japanese yen rose 0.3% to 110.25 per dollar
  • The offshore yuan fell 0.1% to 6.4855 per dollar
  • The British pound rose 0.2% to $1.3769

Bonds

  • The yield on 10-year Treasuries declined four basis points to 1.23%
  • Germany’s 10-year yield declined two basis points to -0.44%
  • Britain’s 10-year yield declined three basis points to 0.55%

Commodities

Opening Bell: China Tech Clampdown Weighs On Futures, Stocks; Gold Rallies
 

Related Articles

Brad McMillan
The Next Crisis: The Debt Ceiling By Brad McMillan - Sep 23, 2021 4

After the past several crises, some real and some manufactured, we are now on our way to the next one: the debt ceiling. To pay for the spending Congress has authorized, the...

Opening Bell: China Tech Clampdown Weighs On Futures, Stocks; Gold Rallies

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other 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, don’t trash it.

  •           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. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. 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.
Comments (3)
Gamars HK
Gamars HK Jul 26, 2021 9:48AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
christos rousakis
christos rousakis Jul 26, 2021 8:42AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
buy mire circus in america fantastic four and captain america ha ha ha
Gamars HK
Gamars HK Jul 26, 2021 8:42AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Wankel YU
Wankel YU Jul 26, 2021 7:58AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
china will kill all us IPO Chinese companies
 
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