US open: Wall Street points lower as Chinese growth slows, covid concerns rise
Fiona Cincotta August 16, 2021 1:50 PM
Oil prices are tumbling lower at the start of the week amid rising concerns over the strength of the Chinese economic recovery.
Dow futures -0.34% at 35372
S&P futures -0.36% at 4452
Nasdaq futures -0.35% at 15085
FTSE -1.27% at 7133
Dax -0.42% at 15910
Euro Stoxx +0.6% at 4203
Covid woes and economic growth concerns drag on sentiment
US stocks are set to start the week on the back foot after touching fresh record highs at the end of last week. Rising covid cases coupled with concerns of the health of the economic rebound in China are weighing on risk sentiment.
Indices had been supported by impressive earnings last week with S&P500 seeing 87% of companies reporting earnings surprises to the upside.
However today the mood is more cautious after Chinese retail sales and industrial production rose more slowly than expected in July. With covid cases on the rise the disruption to businesses is becoming more apparent.
The disappointing Chinese data comes hot on the heels of weaker than forecast US consumer confidence data. Last week data revealed that US consumer morale slumped to the lowest level since 2011.
Geopolitics were adding to the downbeat mood after the Taliban took Afghanistan over the weekend.
Where next for the Dow Jones?
The Dow Jones reached a fresh record high at the end of last week at 35600. The index is easing lower at the start of the week. The index is testing support of the month old ascending trendline. The bearish cross over on the MACD is supportive of further downside. Any meaningful move lower would need to break below the ascending trendline at 35350 and the 50 sma on the 4 hour chart at 35200. It would take a move below 35100 the 100 sma and previous resistance to negate the near term up trend. A move below 34760 could see more sellers jump in. Bulls meanwhile will keep their eyes on 35600 in order to break towards fresh all time highs.
Source: TradingView, StoneX
FX – USD steadies after steep losses, AUD hit by Chinese data
Broadly speaking the FX markets are quiet today after a volatile end to last week.
USD is edging a few pips higher after steep losses on Friday. The steep drop in consumer confidence eased pressure on the Fed to act to tighten monetary policy. There is no high impacting data due for release today. Attention will shift to tomorrow’s speech by Fed Jerome Powell.
AUD/USD is under performing after the weaker than forecast Chinese data. Disappointing data from China weighed on the China proxy the Aussie.
GBP/USD +0.02% at 1.3866
EUR/USD -0.12% at 1.1775
Oil skids lower on Chinese demand concerns
Oil prices are tumbling lower at the start of the week amid rising concerns over the strength of the Chinese economic recovery. Retail sales and factory output data from China were weaker than expected. Official data also showed that refining throughput slowed amid more signs that the latest COVID outbreak was hurting the world’s second largest economy and second largest importer of oil.
China’s crude processing fell on a daily basis to a level last seen in May 2020.
Doubts over the speed of the economic recovery in the US following the sharp fall in consumer confidence was adding pressure oil prices.
US crude trades -1.3% at $6731
Brent trades -1.17% at $6950
02:30 RBA Meeting Minutes
How to trade with City Index
Follow these easy steps to start trading with City Index today:
- Open a City Index account, or log-in if you’re already a customer.
- Search for the market you want to trade in our award-winning platform.
- Choose your position and size, and your stop and limit levels.
- Place the trade.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.