The Nasdaq Is Down. U.S.-Listed Chinese Tech Readies for Worst Month Since 2008.
U.S. stocks, led by the Nasdaq Composite, are slipping at the start of July’s final trading session, while U.S.-listed Chinese technology shares were set for their worst monthly performance since the financial crisis in 2008.
As of the close on Thursday, the S&P 500 was up 2.8% so far in July, while the Dow had risen 1.7% and the Nasdaq Composite had gained 1.9%.
In Asia, Hong Kong’s
declined 1.35%, for a monthly loss of 9.9%, while the
dipped 0.4%, bringing its July decline to 5.4%. The
NASDAQ Golden Dragon China Index
—which follows U.S.-listed Chinese tech—has tumbled more than 22% across July, setting the stage for its worst month in 13 years.
The sharp declines in Asian stocks came amid continuing concern about the spread of the highly contagious Delta variant of coronavirus, and as investors failed to take inspiration from Chinese regulators’ message that they would be more sensitive to markets after a recent crackdown.
Over the past week, regulators in China have targeted companies across sectors including tech, finance, education, and healthcare, broadening scrutiny that has focused in large part on U.S.-listed Chinese tech companies in recent months.
One of China’s top regulators said on Wednesday that the country wasn’t looking to decouple from capital markets, and that Beijing will consider market impacts before introducing future policies, The Wall Street Journal reported.
“It doesn’t appear to be working. The reality is that the recent crackdown by China has let the genie out of the bottle, and confidence appears to have shifted,” said Michael Hewson, an analyst at CMC Markets. “Ultimately no one will risk putting money back into markets until regulators in China put some meat on the bones, and for the moment that’s all that they have. The damage to confidence with respect to recent events may already have been done. “
In Europe, data showed the eurozone economy grew 2% in the last quarter, bouncing back from a recession caused by the Covid-19 pandemic ahead of expectations.
Investors in the U.S. continue to focus on corporate profits.
shares fell 6.8% after reporting a profit of $15.12 a share, beating estimates for $12.30 a share. Sales came in at $113 billion, below expectations for $115.2 billion. Growth in e-commerce revenue slowed sharply and management offered disappointing financial forecasts.
(TEAM) stock rose 11.5% after reporting a profit of 24 cents a share, beating estimates of 18 cents a share. Sales were $559.5 million, above expectations for $471 million.
Procter & Gamble (PG) stock rose 1.8% after reporting a profit of $1.13 a share, beating estimates of $1.08 a share. The company reported sales of $18.9 billion, while Wall Street had expected $18.4 billion.
Exxon Mobil (XOM) stock rose 0.75%. Earnings came in at $1.10 a share, beating estimates of 99 cents a share. Sales totaled $67.7 billion, comfortably above the $66.8 billion consensus estimate.
“As the flood of corporate updates on both sides of the Atlantic slows to a stream and then a trickle, we enter the summer lull for the markets—although this can be a dangerous time for equities,” said Danni Hewson, an analyst at AJ Bell.
“It sometimes doesn’t take much for a market correction to begin and with Covid-19, inflationary pressures and regulatory crackdowns all in the background, there are plenty of potential catalysts for a selloff,” the analyst added.
Write to Jack Denton at [email protected]