Daily Markets: Investors Watching Weak China Data, Delta Variant, Afghanistan, and the Fed

Today’s Big Picture

Weaker-than-expected economic data out of China and delta variant concerns weighed on equity indices in Asia today with Japan’s Nikkei falling 1.6%, Hong Kong’s Hang Seng 0.8%, and China’s Shanghai Composite flat on the day. Equity markets in South Korea were closed today. By mid-day trading, equity indices in Europe were a sea of red, and following yet another record close for the S&P 500 on Friday, U.S. futures point to down open later this morning.

If you were hoping we would ease into Labor Day, we’re sorry to say that’s not the case. In addition to some quarterly earnings reports out today and a scoop of economic data, investors will be contending with potential geopolitical implications of the Taliban’s seizure of power in Afghanistan over the weekend, reports the Federal Reserve is likely to announce its tapering plans in September, and Hurricane Fred closing in on Florida’s Panhandle. That’s a busy start to a week that also includes a bevy of quarterly earnings from retailers, key July economic data, and the meeting minutes from the Fed’s July monetary policy meeting.

Data Download

Coronavirus

The Japanese government is set to extend its "state of emergency" lockdown to the middle of September in Tokyo as well as adding several other regions.

Biden administration is preparing a plan to rollout COVID-19 booster vaccines for some sections in the population as early as this fall as worries over the Delta variant grow and hospitals Texas, Florida, Louisiana, and Mississippi are once again swamped with Covid-19 patients, the majority of them unvaccinated. Over 90% of Florida’s ICU beds are currently filled. The first recipients of the booster dose are expected to be the most vulnerable, those in nursing homes and healthcare workers.

Hospitalizations for Covid-19 patients in their 30s have hit a new record high of 2.5 per 100,000, driven by the surge in the Delta variant which is both more contagious and has seen a higher rate of severe illnesses in those infected. The prior peak was 2.0 per 100,000 back in early January. Those aged 18-29 and aged 40-49 also hit record highs last week, according to the CDC.

The number of children hospitalized with Covid-19 has also hit a record high of just over 1,900 Saturday as hospitals across the South are stretched to capacity, thanks again to the Delta variant. Children currently make up 2.4% of the country’s Covid-19 hospitalizations.

Starting today, New York City will impose a vaccination requirement on dining, fitness clubs, and performances held indoors, making it the first major U.S. city to implement such restrictions.

International Economy

Japan’s GDP annualized growth rate in Q2 2021 came in at +1.3% vs. the prior reading of -3.9% and the expected 0.7%. Its Industrial Production soared 23% YoY in June vs. the May figure of +21.1% and the expected reading of +22.6%.

Chinese Industrial Production rose at a slower +6.4% YoY in July YoY vs. the upwardly revised +8.3% in June, missing the expected +7.8%. July Retail Sales also missed expectations, rising 8.5% YoY vs. the expected 11.5% and the +12.1% YoY gain posted in June. The July Unemployment Rate ticked higher to 5.1%, up from June’s 5%.

Domestic Economy

On Friday we learned that Import Prices rose 10.2% YoY in July, slowing from June’s 11.3% pace. Exports, on the other hand, accelerated to 17.2% YoY from 16.9% in June. Later today, we will get the NY Empire State Manufacturing Index, which is expected to drop to 30 in August from July’s record-high 43.

Markets

The stock market ended last week mostly higher with the Dow Jones Industrial Average up 0.04% and S&P 500 adding 0.2%, leading both major market indices to fresh record highs (again!) while the Nasdaq rose and the Russell 2000 slumped. To say Friday’s trading session was subdued would be a bit of an understatement with the S&P 500 trading inside an eight-point range.

Stocks to Watch

Before equity markets open this morning, investors will be thumbing through several quarterly earnings reports including those from Oatly Group (OTLY).

Walt Disney’s (DIS) Free Guy is a litmus test for the movie box office and generated $28.4 million over its opening weekend according to Box Office Mojo. Based on that take, Ryan Reynolds is reporting we could very well see a sequel.

Following Amazon's heels, Walmart (WMT) is looking for a senior director who will “identify customer needs and translate them into product requirements” as well as identify crypto-related investments and partnerships. Another data point that cryptocurrencies are heading toward the mainstream.

Cybersecurity stocks, such as Fortinet (FTNT), FireEye (FEYE), and Mimecast (MIME) are likely to see a boost today following the news T-Mobile (TMUS) is investigating claims of a massive customer data breach which hackers claim has affected 100 million users. The data breach reportedly includes social security numbers, phone numbers, names, physical addresses, unique IMEI numbers, and driver's license information.

The Financial Times reports Facebook (FB) and Google (GOOGL) are planning a new undersea cable to connect Japan with south-east Asia as the Silicon Valley groups boost investment in internet infrastructure in regions with high growth potential.

Chevron Corp. (CVX) is postponing the full return of employees to its headquarters in San Ramon, California, and its largest office in Houston due to the rapid spread of the Covid-19 delta variant.

After today’s market close, Fabrinet (FN), Roblox (RBLX), and Tencent Music (TME) are slated to be among the companies reporting their latest quarterly results. Those looking to get a jump on the earnings reports in the coming days should visit Nasdaq’s earnings calendar page.

On the Horizon

• August 17: NAHB Housing Market Index, Retail Sales, Industrial Production, Business Inventories
• August 18: Building Permits, Housing Starts, EIA Energy Stocks, FOMC Minutes
• August 19: Philadelphia Fed Manufacturing Index, weekly jobless claims
• August 23: Chicago Fed National Activity Index, Markit Manufacturing, Services & Composite PMIs, Existing Home Sales
• August 24: New Home Sales, API Crude Oil Stock report
• August 25: Durable Goods Orders, EIA Energy Stocks
• August 26: Jobless Claims, GDP Growth Q2, Corporate Profits
• August 27: Personal Income & Spending, Wholesale Inventories, PCE Price Index, Goods Trade Balance, University of Michigan Consumer Sentiment Report
• August 30: Pending Home Sales, Dallas Fed Manufacturing
• August 31: S&P/Case-Shiller Home Price Index, Chicago PMI, Conference Board Consumer Confidence, API Crude Oil Stock report

Thought for the Day

"Summer means happy times and good sunshine. It means going to the beach, going to Disneyland, having fun." ~ Brian Wilson

Disclosures

• Fortinet (FTNT), FireEye (FEYE), and Mimecast (MIME) are constituents of the Foxberry Tematica Research Cybersecurity & Data Privacy Index
• Oatly Group (AB) is a constituent of the Tematica BITA Cleaner Living Index
• Oatly Group (AB) is a constituent of the Tematica BITA Cleaner Living Sustainability Screened Index
• Walmart (WMT) is a constituent of the Tematica Research Dividend All-Stars Index

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Stocks Economy Coronavirus Earnings Central Banks Smart Investing