(24 JULY 2020)DAILY MARKET BRIEF 1:Weak US Recovery Concerns Investors
US equities have lost earlier gains and fell to relatively the same levels where they started on Monday. Nasdaq (-2.29%) has experienced the worst performance in a month, dragged down by mega-cap tech stocks.The tech sector used to lead the stock market recovery that took off in March, but it’s now under pressure amid fears of overvaluation. Apple fell after Goldman Sachs recommended investors to skip the stock, anticipating slower growth next year. Microsoft also fell despite upbeat quarterly reporting as its guidance fell short of expectations. Markets await Apple, Facebook, Alphabet, and Amazon to report on their quarterly performance next week.
Elsewhere, the S&P 500 dropped by 1.23%, and Dow lost 1.31%. Investors focused on the unexpected surge in initial unemployment benefit applications, which suggest that the pace of recovery is losing strength. The US Labor Department reported 1.4 million more jobless claims in the week ended July 18, while analysts expected 1.3 million.
Meanwhile, the number of COVID cases continues to increase. Infectious disease experts warned against reopening schools in Florida, California, Texas, and other states where coronavirus cases climb.
The markets can return to vaccine hopes and stimulus optimism to halt the selloff, but the US Congress has to green-light the further injection of new money first.
In Asia, stocks continued the decline and are set to end the week on a downbeat note. Investors focused on the weakening labor market in the US and the debate between Democrats and Republicans on the next stimulus package.
At the time of writing, China’s Shanghai Composite is down 2.77%, and the Shenzhen Component has tumbled 4.20%. Sino-US tensions are putting additional pressure on equities. China threatened to retaliate against the US decision to close its consulate in Houston.
Hong Kong’s Hang Seng Index has dropped 2.26%, as the city saw a new record of 118 coronavirus cases on Thursday.
South Korea’s KOSPI has declined by 0.59%, as the county reported disappointing GDP performance figures earlier this week.
Australia’s ASX 200 is down 1.17%. New South Wales reimposed a lockdown earlier today as Sydney reported a new outbreak of COVID cases.
Japanese markets are closed for a second day in observance of Marine Day.
European stocks are set to end the week lower. DAX and FTSE futures are currently flashing red.
In individual corporate news, Intel stock tumbled over 8% as investors ignored the better-than-expected Q2 earnings and revenue and instead focused on the company’s failure to launch its next-generation chips according to the initial deadline.
Twitter defied the general pessimism among tech stocks as it reported a record annual growth of daily users who can view ads. The share price rose about 4% as the company’s average monetizable daily active users (mDAU) surged 34% y/y to 186 million.
