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Futures in the United States and Europe are flat today


25 August 2021

Futures in the United States and Europe are flat today, following yesterday’s bullish rally that pushed the Dow and Nasdaq to record closes. Investors are optimistic about the US economic recovery, especially now that the FDA has fully approved Pfizer’s vaccine, and more people will be willing to take the vaccine shot. Furthermore, traders have been injecting capital into Chinese shares as they are gaining a better understanding of China’s regulatory outlook. This shift toward Chinese stocks aided Nasdaq’s rise as investors took advantage of the opportunity to buy shares of Chinese companies that had suffered massive losses in recent months.

Stock Market

In yesterday’s session, the Dow Jones Industrial Average jumped 0.09%, and the S & P 500 index climbed 0.15%. The Nasdaq, the tech-savvy index, rose 0.52%, and the Russell 2000, the small-cap index, hopped 1.02%. Despite the fact that many investors and companies are expanding their exposure to battered Chinese companies, investors should be aware that regulatory crackdowns on these companies are still possible in the near future. As a result, regulatory risks are still very much present and can have a negative impact on stock traders.

Chairman of the U.S. Securities and Exchange Commission, Gary Gensler, made it clear on Tuesday that Chinese companies that are trading their stocks on U.S. stock exchanges will be required to disclose regulatory and political risks on their financial statements. This is in addition to the requirement previously imposed on Chinese companies seeking IPOs in the United States. These businesses could begin complying with these requirements as early as 2022.

Investors should take note that stocks linked to economic recovery are once again in the spotlight as concerns about the rapid spread of the Delta variant subside. As a result, stocks in travel companies, such as airlines and cruise lines, have been trading higher over the last two days. Shares of casino companies such as Wynn Resorts rose nearly 7% after Covid-related restrictions were relaxed in Macau, as coronavirus cases in China fell.

As of now, investors believe that the rapid uptick in Coronavirus cases is behind us, thanks to China relaxing restrictions and the FDA’s approval of Pfizer- BioNTech’s vaccine, which could lead to more aggressive and widespread vaccination campaigns. However, investors should keep in mind that any change in trajectory could have a negative impact on economic recovery in the coming months.

Moreover, data of Core Durable Goods Orders is scheduled to be published today. The data will provide valuable information related to the future outlook of economic activity as higher orders would mean more production and hence growth in economic recovery.

Bitcoin

Mega Bitcoin investors appear to be increasing their holdings in recent months, coinciding with the massive recovery in crypto prices. These investors have exposures in excess of $50 million and have enhanced their purchases since the end of June. The whales’ activity has been linked to price movement since the beginning of 2021. These investors were the driving force behind the rally seen in February, and they were also the driving force behind the price drop in March and April, when they sold off their holdings to gain returns at peak prices.

However, since June, these whales have been purchasing digital coins worth nearly $10 billion, and as per reports, their holdings have returned to February levels. These large investors are usually in it for the long haul, keeping nearly 75% of their purchases. Mega-investor interest suggests that a bullish rally to record-high prices is on the horizon.

Oil

Oil prices rose nearly 3% on Tuesday, owing to a stronger demand outlook as countries recover from the economic downturn caused by the Delta variant outbreak. The FDA’s approval of the vaccine suggests that national lockdowns and severe restrictions seen in 2020 are now likely behind us, and the hope is that the corona situation will only improve from here. As a consequence of the rise in economic activity, oil companies will likely see growing demand as travel and business operations resume to pre-pandemic levels.

Oil prices have also risen as a result of a fire at a Mexican oil rig. Because of this, the supply of oil has been significantly impacted, resulting in a 25% drop in state-run Pemex’s oil supply. The fire halted nearly 421,000 barrels per day of production.

The crude oil inventories data, which is set to be released today, will provide a clearer picture of what the shift in demand and supply outlook means for investors.

Gold

The Jackson Hole meeting, which is scheduled to take place on Thursday and Friday, is critical for the precious metal because it will provide investors with some guidance on how the Fed will likely approach stimulus tapering and interest rate hikes. The yellow metal has gained strength in recent days and is now trading above $1,800 per ounce. The surge in gold prices is due to a downturn in economic activity, which has led traders to believe that the central bank’s stimulus tapering may be delayed in order to provide more support to the US economy.

Asian Markets

Asian Pacific markets have performed well this week as the delta outbreak in China appears to have subsided. There haven’t been any new domestic cases in the last two days. Furthermore, the Chinese central bank has stated that it will boost credit support to businesses in order to help the country’s real economy grow.

As of 11:17 p.m. EST, the Nikkei is flat while the Shanghai Composite Index is down 0.03%. The ASX 200 index surged 0.23%, and Seoul’s Kospi fell 0.29%. The Hang Seng index in Hong Kong, has dropped 0.69%.

#source

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