Stock Futures Edged Higher Ahead Of Economic Data
U.S. stock futures are ticking higher after a volatile week on Wall Street. Investors are eagerly eyeing the Jackson Hole symposium for clues. The event, which takes place from the coming Thursday to Saturday, could provide a hint on Fed’s timeline at dialing back its $120 billion a month bond-buying program. No doubt, the asset purchase program had been a major policy underpinning the stock market this year. At the same time, rising concerns that rapid spread of COVID-19 infections may slow the global economic recovery sent stocks lower in recent weeks.
“If there is any sign that the U.S. economy is slowing, the Fed won’t taper … There is a long way between laying out a pathway to tapering and actually doing it.”- Michael Hewson, chief market analyst at CMC Markets
Historically, August is a volatile month for the stock market, and this year is no different. Certainly, a variety of factors may have given investors reasons to pause. But some are taking a chance after a strong start in the Asian and European markets. As of 7:18 a.m. ET, the Dow, S&P 500, and Nasdaq futures are pointing to a rebound in the stock market today, moving 0.42%, 0.34%, and 0.30% higher respectively.
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Chinese Tech Stocks Rebound After 5-Week Selloff
Chinese tech stocks are poised to rebound in the stock market today. This came after the market’s slump into bear-territory last week, pushing their levels into a deeply oversold zone. If Hong Kong’s trading activity is of any indication, we could expect these Chinese tech stocks to tick higher when the market opens this morning. Bilibili (NASDAQ: BILI) and Tencent (OTCMKTS: TCEHY) were among those that surged in the Hong Kong stock market. Meanwhile, Alibaba (NYSE: BABA) remains oversold as it dropped to another record low in Hong Kong.
“After another week of heavy selling, some rebound can be expected as much of the tech sector is beginning to look like value plays … Volatility in the sector may ease as markets settle into the new reality of long-term reforms, but there is still quite a lot of uncertainty on the impact to the sector’s growth profile”- Marvin Chen, Analyst at Bloomberg Intelligence.
While many investors remain cautious, the recent selloff has created opportunities for some. Some are also keeping in mind that China recently reported worse-than-expected retail sales growth. There are a handful of Chinese stocks reporting earnings this week. Amongst them, JD.com (NASDAQ: JD) reported its second-quarter results this morning. In detail, net revenues for the quarter were RMB 253.8 billion ($39.3 billion), a 26.2% increase year-over-year.
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Crypto Continues To Rebound As Bitcoin Topped $50,000
Bitcoin has surpassed the $50,000 mark as it continues to climb after months of weakness. The recovery comes after Bitcoin was trading sideways over the past several months. It had dropped from a record of almost $65,000 in mid-April. Overall, some would argue that these are positive signs for the crypto trade as investor interest continues to grow. The global cryptocurrency market cap was at $2.16 trillion on Sunday, according to data from CoinGecko.com.
Another factor to consider in the broader crypto trade now would be wider adoption. Notably, fintech giant PayPal (NASDAQ: PYPL) is launching a cryptocurrency service in the United Kingdom. Like the U.S. version of the product, the online payment giant is relying on Paxos to enable British customers to buy, hold, and sell digital currencies.
In April, the U.K. Treasury and Bank of England said they would evaluate the potential launch of a digital version of the British pound. The local press there calls it “Britcoin”. “It makes sense that, as there is increased consumer interest and increased volume, the regulators are putting more attention into this space,” da Ponte said, adding that PayPal has built “strong regulatory relations”.
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Oil Prices Rebound As Investor Snap Up Bargains
Oil prices reversed out of a seven-day losing streak on Monday. This came despite the lingering fears of how the spread of the Delta variant might affect fuel demand. The recent strength in the U.S. dollar also kept investor enthusiasm in check. Traders who want to dip their toes in the sector could also consider oil stocks. Here’s why.
According to the latest FactSet data, the energy sector’s Q2 2021 revenue growth rate of 24.9% came in way higher than Wall Street’s estimate of 19.4%. What’s more impressive is that the sector reported earnings of $15.9 billion. That compares to a loss of $10.6 billion in the prior-year quarter. All of this is made possible with the stellar performance posted by oil giants ExxonMobil (NYSE: XOM) and Chevron (NYSE: CVX).
Sure, the outlook for the sector as a whole may not look as attractive as some might hope. But the recent dividend hikes could woo some investors back. Some of the notable oil companies that have announced dividend hikes are Royal Dutch Shell (NYSE: RDS.A), ConocoPhillips (NYSE: COP), and BP (NYSE: BP). And they have also reinstated share buybacks after bumper earnings. Whether such an initiative will work on long-term investors remains to be seen.
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Earnings Winding Down
The stock market has struggled to find a direction after a volatile week. Investors are bracing for the withdrawal of unprecedented liquidity. Some investors might take some profit in a market that is pricing in peak earnings. Now, second-quarter earnings are largely in the rearview mirror. But a few companies are still on deck. Some of the companies reporting earnings before today’s opening bell include JD.com, VivoPower(NASDAQ: VVPR), and Ituran Location and Control (NASDAQ: ITRN).
Alternatively, if you are looking to get in on earnings action after the closing bell, Palo Alto (NYSE: PANW) and Quipt Home Medical (NASDAQ: QIPT) are releasing their earnings too. Some of the most highly-anticipated earnings reports on Friday topped Wall Street’s expectations. For instance, Foot Locker(NYSE: FL) stock is surging in the pre-market trading today after a huge earnings beat. It also raised its full-year outlook for the second half of the year. Hence, whether it is to keep an eye on the Jackson Hole Economic Policy Symposium or simply chasing the remaining earnings reports, there should be enough to keep you occupied as we kick start the week.
