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China Markets Panic, Tesla Beats, Coffee Soars, Apple Due - What's Moving Markets

EconomyJul 27, 2021 06:34AM ET
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© Reuters.

By Geoffrey Smith 

Investing.com -- Panic selling hits Chinese stock and bond markets as foreign investors are rumored to head for the exits. Tesla (NASDAQ:TSLA) reports record sales and profits, while Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) all report after the bell. The Federal Reserve starts a two-day meeting and coffee futures hit another multi-year high after fresh forecasts of frost in Brazil. Here's what you need to know in financial markets on Tuesday, 27th July.

1. Panic on the streets of Shanghai, Shenzhen, Hong Kong…

Panic selling gripped Chinese stock and bond markets as investors rushed for the exits in response to an ever-wider regulatory clampdown on technology companies.

Hong Kong’s Hang Seng index fell 4.4% and its technology index fell 6.7% to its lowest in over a year, triggering forced selling in mainland markets too: The FTSE China A50 fell 4.0% and the Shanghai Shenzhen CSI 300 fell 3.5% to its lowest since October.

Newswire reports suggested that the ‘National Team’ of state-controlled banks and brokerages, which often steps in to stabilize the market during its bouts of volatility, had been conspicuous by its absence.

In contrast to Monday’s selling, there was little concrete news driving Tuesday’s activity, but rather rumors of widespread sales of Chinese assets by U.S. and other foreign investors. That also drove the offshore yuan down as much as 0.6% and further undermined a local bond market that is already under some stress.

2. Tesla beats records, delays truck launches

Tesla (NASDAQ:TSLA) stock rose over 2% in premarket trading after the electric vehicle maker reported a record quarterly profit to match the record delivery numbers it had already posted.

The company’s improved operating performance caught the eye, with the historic reliance on sales of carbon credits dwindling in importance (they accounted for only 3% of group revenue, compared to 7% a year ago). Earnings per share of $1.45 were more than 50% above expectations. The company generated enough profit to absorb a $23 million impairment on its {{1057391|Bitcoin} holding without much ado.

However, the update wasn’t free from blemishes: the company again delayed the launch of its Semi truck, and gave no word as to when its Cybertruck pickup would hit the market. CEO Elon Musk, who is currently on trial for allegedly defrauding shareholders with the acquisition of Solar City five years ago, also said he wouldn’t take part in future earnings calls.

3. Stocks set to open lower; durable goods and consumer confidence data due

U.S. stock markets are set to open lower later, in an admittedly faint echo of developments in Asia. Trading is expected to stay moderate as the Federal Reserve begins its two-day policy meeting, which some expect to provide clearer evidence of a shift toward withdrawing some stimulus over the second half of the year.

By 6:15 AM ET (1015 GMT), Dow Jones futures were down 148 points, or 0.4%, while S&P 500 futures were down 0.3% and Nasdaq 100 futures were down 0.1%.

Apple, Alphabet and Microsoft are all due to report after the close, another reason why trading may be subdued this session. General Electric, United Parcel Service and 3M have already gotten the ball rolling. 

Durable goods orders for June, along with the regular updates on national home prices and the monthly Conference Board consumer confidence survey may all draw attention in the early part of the day.

4. Wake up and smell the seven-year high

Coffee futures continued their rocket-like ascent on Monday after new weather forecasts of another cold snap around key growing areas in Brazil, the world’s biggest producer.

Arabica coffee futures in the U.S. rose another 10% to their highest in nearly seven years after Brazil’s food supply agency Conab said last week’s frosts had hit up to 150,000 to 200,000 hectares (494,210 acres) over 11% of Brazil’s arabica crop area.

Analysts quoted by Reuters said the extent of the actual damage to the 2022 crop was still unclear, and their estimates of the actual shortfall were in a wide range of between 5.5 and 9 million bags. Last week, the estimate was only 2-3 million.

Futures have consolidated down by some 0.6% in the overnight session. Robusta coffee futures in London, meanwhile, rose another 1.8% to a four-year high. Starbucks is due to report earnings after the close.

5. Oil drifts amid reports of higher Covid-19 cases, fuel shortages 

Crude oil prices drifted overnight after a mixed set of news on fuel demand and the progress of the pandemic.

By 6:15 AM ET, U.S. crude futures were up 3 cents, or less than 0.1% at $71.94 a barrel, while Brent futures were up 0.2% at $73.86 a barrel, ahead of the release of American Petroleum Institute inventory data at 4:30 PM ET.

Bloomberg reported on Monday that American Airlines (NASDAQ:AAL) and Southwest Airlines (NYSE:LUV) were both experiencing shortages of jet fuel, in what looks like further evidence of demand rebounding ahead of supply.  There was also better news from Europe, where the U.K. and the Netherlands again reported sharp declines in new cases of Covid-19, while the infection curves in Spain and Portugal flattened further.

However, cases continue to rise in France, Germany and Italy, and they hit their highest since March in the U.S. at over 88,000 on Monday.

China Markets Panic, Tesla Beats, Coffee Soars, Apple Due - What's Moving Markets
 

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Comments (6)
Ac ln
Ac ln Jul 27, 2021 11:42AM ET
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the us markets will not give a flying duck just keep the fraud going and pump the housing market even higher
Cosmic Dust
Cosmic Dust Jul 27, 2021 8:37AM ET
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Also why investing in China knowing that it's ruling party is guilty of spreading the deadly virus against the world? CCP has been waging unrestricted warfare (bio, cyber, misinfo... you name it) against the US. Any penny for China is a penny against America and thus yourself.
Zach Lohman
Zach Lohman Jul 27, 2021 8:36AM ET
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Asia’s cheap again. The US is expensive.
Cosmic Dust
Cosmic Dust Jul 27, 2021 8:31AM ET
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As long as China is still ruled by CCP, do not invest. Why? CCP is a criminal cartel that does not follow any international rules or regulations. And all Chinese businesses are tightly controlled by CCP.
andy matalobos
andy matalobos Jul 27, 2021 8:31AM ET
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America is far worse....America was built by greed, corruption, fraud and enslaved more than fifty percent of its population with the support of bayonets....America is great only through the lens of Hollywood.
Investing Man
Investing Man Jul 27, 2021 8:31AM ET
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Really is common sense. Pay another country's workers you help that country, not your own. Sadly, China isn't grateful. Instead they are like spoiled little children.
Sean Livingstone
Sean Livingstone Jul 27, 2021 7:07AM ET
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The journalists and the US team don't understand China and what they want before a talk could begin. All these reporting are wrong.
jason xx
jason xx Jul 27, 2021 7:07AM ET
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They didn't say anything about what they want?
Sean Livingstone
Sean Livingstone Jul 27, 2021 7:07AM ET
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jason xx They did tell the US team at the last meeting. Loud and clear.
Sean Livingstone
Sean Livingstone Jul 27, 2021 7:07AM ET
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Let me tell you one fake news the media spreads on China. You recall media says China jailed 1 million uyghur? They found a prison in Xinjiang that could contain 10,000 prisoners. If 1 million uyghur are in jail, then they need to find 100 of these prison camps at least. If they could find one, then they could find 100. Not forgetting other criminals. 100 ain't difficult to find on your satellite imagery. Now you understand why China is angry and doesn't give a *****to the USA?
Sean Livingstone
Sean Livingstone Jul 27, 2021 7:07AM ET
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jason xx  you can continue to dislike my comment, you are just like any Americans who don't understand the whole situation. Americans have been used to telling others what to do, and if they don't obey, missiles and bombs will follow. Don't believe? Ghaddafi was killed not because he infringed human rights, but he wanted Petrol Dollar. Multiple warnings were sent to him, and he was killed for pushing Petrol Dollar ahead. Saudi was responsible for WTC bombing... Osama Bin Laden and most of the bombers were Saudis. However, which countries were hit? Afghanistan, Iraq, Iran, Morocco, Egypt, Libya... why? Saudi listens to the USA even though it is authoritarian and infringe human rights more than any of "punished" countries. What has Iran done to the US? Yes, by being the enemy of Saudi. When shall we stop being the dogs for Israel and Saudi? Go figure what US is doing to China.
Jan ciechanowicz
Jan ciechanowicz Jul 27, 2021 6:56AM ET
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They will be the largest ecomony in the worid. Irespective of what USA think
 
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