Financial markets kicked off the week on a volatile note Monday, with bitcoin soaring and Wall Street reaching all-time highs while Asian stocks tumbled.
The three major US indices again closed at records as big earnings announcements overcame fears that the Delta variant of Covid-19 could hold back the country’s economic recovery. US companies have “a good shot at probably 18 months of continued growth” in light of the reopening economy, said Kim Caugher Forrest, chief investment officer at Bokeh Capital Partners. “This is a pretty good basis for growth and a reason to own stocks, as opposed to buying real estate or go into bonds.”
Traders this week are focused on a two-day meeting of the US Federal Reserve’s policy setting committee concluding on Wednesday, as well as earnings announcements from tech heavyweights including Alphabet, Amazon, Apple and Microsoft. The Fed’s deliberations “are always important for the markets, especially when we are getting closer and closer to the time when there will be a shift in the central bank’s policy stance,” said Fawad Razaqzada, an analyst at ThinkMarkets. After Wall Street closed, US electric carmaker Tesla reported its first-ever quarterly profit above $1 billion and reiterated its 2021 production targets even as its supply chains faced upheaval. European stocks finished mixed while in Asia, Hong Kong led losses earlier in the day after China cracked down on its tech firms over the weekend.
– ‘Virtually uninvestable’ –
Meanwhile, traders continue to monitor risks from the fast-spreading Delta variant, which has sent infections spiking and forced some governments to reimpose economically painful lockdowns or other containment measures. Tokyo closed higher however, as traders returning from a Japanese public holiday caught up with gains made elsewhere last week, when stocks in New York ended Friday’s trading at records. In China meanwhile, education companies were battered after the government unveiled reforms that will make a huge change to how they do business. Arguing that the sector had been “hijacked by capital,” Beijing said it would prevent firms teaching school curriculums from making a profit, raising capital or going public. JPMorgan Chase analysts said it was uncertain whether firms could continue to be traded on stock markets. “In our view, this makes these stocks virtually uninvestable,” it said.
– Bitcoin crosses $40,000 –
Bitcoin briefly climbed above $40,000 after Tesla expressed fresh support for the world’s most popular cryptocurrency, before settling just above $37,000. “The bulls are back in town, and this time it seems like they are back with a vengeance,” said AvaTrade analyst Naeem Aslam.
– Key figures around 2125 GMT –
New York – Dow: UP 0.2 percent at 35,144.31 (close)
New York – S&P 500: UP 0.2 percent at 4,422.30 (close)
New York – Nasdaq: FLAT at 14,840.71 (close)
EURO STOXX 50: DOWN 0.2 percent at 4,102.59 (close)
London – FTSE 100: FLAT at 7,025.43 (close)
Frankfurt – DAX 30: DOWN 0.3 percent at 15,618.98 (close)
Paris – CAC 40: UP 0.2 percent at 6,578.60 (close)
Hong Kong – Hang Seng Index: DOWN 4.1 percent at 26,192.32 (close)
Shanghai – Composite: DOWN 2.3 percent at 3,467.44 (close)
Tokyo – Nikkei 225: UP 1.0 percent at 27,833.92 (close)
Euro/dollar: UP at $1.1802 from $1.1770 on Friday
Pound/dollar: UP at $1.3815 from $1.3754
Euro/pound: DOWN at 85.41 pence from 85.61 pence
Dollar/yen: DOWN at 110.37 yen from 110.51 yen
Brent North Sea crude: UP 1.0 percent at $74.84 per barrel
West Texas Intermediate: UP 0.2 percent at $72.19 per barrel