US equities were mixed on Monday, though the main rhetoric was bearish. Dow Jones (+0.04%) saved the day by securing a fragile gain, but S&P 500 (-0.94%) and Nasdaq (-2.13%) were in free fall for most of the session. Investors ignored the news about COVID vaccines and faced a rapidly increasing number of coronavirus cases. The selling pressure increased after California Governor Gavin Newsom postponed the state’s reopening, banning restaurants, bars, and other indoor activities.
The tech giants that helped Nasdaq update the all-time high early in the session have deflated by the evening, with Amazon, Nvidia, Microsoft, and Facebook losing over 2% after initial gains.
Nevertheless, such a correction might be on time as equities rallied almost exclusively on aggressive stimulus from the Fed. Now the earnings season will show the true impact of the lockdown measures.
Wells Fargo, JPMorgan, and Citigroup are scheduled to show their cards on Tuesday, providing further hints on how the financial sector has coped with the pandemic. Speaking about cards, casino stocks were boosted by reports that Macau lifted its quarantine restrictions.
Asian stocks are now following the US markets and departing from Monday gains. Investors are worried about the uncontrollable increase in COVID cases. An official from the World Health Organization said that things might not go back to normal for the foreseeable future.
Besides this, Asian equities have been dragged down by increasing tensions between the US and China, after US Secretary of State Michael Pompeo stated that Washington had rejected China’s ambition in the South China Sea. Beijing has recently launched some military exercises in the contested waters surrounding the South China Sea’s Paracel Islands. As if it wasn’t enough, the dispute comes on top of existing tensions related to trade and Hong Kong.
At the time of writing, China’s Shanghai Composite is down almost 1%, and the Shenzhen Component has lost 1.68%. Just recently, China announced that exports and imports in Yuan terms beat expectations in June, rising 4.3% and 6.2%, respectively.
Hong Kong’s Hang Seng Index is down 1.47%. The financial hub imposed its toughest social distancing rules to date.
Japan’s Nikkei 225 is down 1.04%, and South Korea’s KOSPI has declined by 0.49%.
Australia’s ASX 200 has dropped by 0.83% as some states are returning to lockdowns amid a renewed outbreak in Sydney.
In individual corporate news, UK Prime Minister Boris Johnson is about to announce the ban of Huawei from Britain’s 5G network later today. The decision will intensify tensions with China but will please the US.
European stocks have no choice but to join the general bearishness. DAX and FTSE futures are flashing red at the moment.
