Stock markets in Europe started off showing moderate losses in early trading on account of the large declines seen in Asia overnight. Indices in mainland China and Hong Kong came under pressure as the Chinese authorities tightened regulation on its technology sector. Traders in Europe were spooked by the sizeable declines registered in the Far East and in turn they dumped stocks. As the morning session went on, the mood lifted a little as US index futures started to erase early losses, most European markets are now in positive territory. Across the Atlantic, the S&P 500 registered a new record high. Optimism is in circulation as it is a big week for corporate earnings. Major companies like Tesla, Apple, Facebook, and Amazon will announce their latest quarterly figures. Tech giants have enjoyed a great run in the past 18 months, and some argue they now account for too much of the rally seen in US markets.
The German IFO business climate reading for July was 100.8, which narrowly undershot the 102.3 forecast, the prior reading was 101.7. It is a little concerning that business confidence in the largest economy in the eurozone nudged lower, it ties in with the view that some economies are being hindered due to the rising number of Covid-19 cases. Despite, the IFO numbers the euro is higher across the board.
The US dollar is down today as traders look ahead to Wednesday’s Federal Reserve meeting. Earlier this month, Fed Boss, Jerome Powell, said that although the labour market is improving, it is still too soon to scale back the government bond buying scheme. Last week, the jobless claims report increased to 419,000, the highest mark in nine weeks. Some traders are taking the view the US central bankers will not be any more hawkish than they were in June. The greenback also came under pressure in the wake of today’s new home sales, where the reading dropped to 676,000, the lowest mark in 13 weeks.
Oil had a rocky ride last week but today its volatility has declined. WTI and Brent enjoyed a rebound late last week but today they are down on the session due to worries demand will weaken. China is one of the largest importers of oil in the world and the flooding in the country has increased concerns that its appetite for the energy will be diminished.