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Premarket stocks: Markets are climbing a wall of worry from Evergrande to Delta and inflation

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But to keep advancing, stocks will need to surmount a lengthening list of anxieties simmering under the surface that threaten to curtail the year’s spectacular run.

“We’ve been in the camp that we’re overdue for a correction, something in the 5-10% range that is a buyable pullback,” said Cliff Hodge, chief investment officer at Cornerstone Wealth.

This may not be the week. Bespoke Investment Group has highlighted the prevalence of “turnaround Tuesdays,” observing that after Monday losses of 1.5% or more, the following trading session has “much more frequently led to gains of more than 1% than losses of more than 1%.”

Evergrande: Attention on Monday focused on Evergrande, the Chinese conglomerate battling a debt crisis. Should the company default on its massive liabilities, there are fears it could spark a “Lehman moment,” in which the collapse of a single entity ricochets throughout the financial system.

There are plenty of market analysts pushing back on that narrative. They argue that the fallout is likely to remain contained, especially if Beijing steps in to cushion the blow. But with interest payments totaling more than $100 million due Thursday on two of the company’s bonds, all eyes are on what happens next.

Growth: The Evergrande saga could weigh on China’s property sector, a key engine of growth, at a time when the world’s second largest economy is already stalling.

In the United States, meanwhile, the Delta variant of the coronavirus is hurting the recovery, despite some signs of resilience in recent data. The Back-to-Normal Index created by CNN Business and Moody’s Analytics fell back to 89% as of Sept. 17 as Americans cut back on travel and dining out.

Inflation: The Organization for Economic Cooperation and Development upgraded its inflation forecast for 2021 and 2022 on Tuesday. It now predicts that consumer inflation across G20 countries will sit at 4.5% at the end of this year before easing slightly to 3.5% by the end of next year — still much higher than the long-term trend.

Supply chain problems are adding to upward pressure on prices. On Monday, FedEx (FDX) announced that it will increase its shipping rates in the new year, citing “incremental costs associated with the challenging operating environment.” Businesses could pass these higher expenses along to consumers. Surging natural gas prices could also hit pocketbooks.

“Supply pressures should fade gradually, wage growth remains moderate and inflation expectations are still anchored, but near-term risks are on the upside,” the OECD said in its report.

Debt debate: The United States is in a race against the clock to raise its debt ceiling, and a showdown in Congress looks imminent.
Analysts at BlackRock (BLK) told clients this week that they see a “low risk of technical default and limited chance of a temporary government shutdown.” Yet they still think “the twists and turns could trigger jitters in markets that have had an extended run higher.”

The Fed: The most immediate concern is the upcoming policy announcement from the Federal Reserve on Wednesday.

The meeting is expected to be a crucial indicator of how quickly the central bank plans to pull back crisis-era support for the economy. Consensus is growing that the Fed will hold off until November before announcing a taper that kicks in by year-end. Tomorrow’s meeting will also include the publication of the Fed’s latest economic projections, and its “dot plot,” which signals when individual members expect interest rate hikes to take effect.

Universal Music shares jump in Amsterdam debut

Music streaming is booming, and investors desperately want a piece of the action.

The latest: Shares of Universal Music Group, which were spun off by French media conglomerate Vivendi, were last up 35% in their market debut in Amsterdam on Tuesday.

The world’s biggest label, which is now valued at roughly $53 billion, is home to stars including Ariana Grande, Taylor Swift, Justin Bieber and Billie Eilish, and also controls the back catalogues of music greats like Marvin Gaye, The Rolling Stones and Frank Sinatra.

Following the listing, Vivendi holds a 10% stake in the company. A consortium led by China’s Tencent controls another 20%, while billionaire Bill Ackman’s Pershing Square also owns 10%.

Step back: Subscription music services have become hugely important to UMG, which has bet that streaming will help offset declines in physical sales.

In 2020, UMG generated €3.8 billion ($4.5 billion) of revenue from subscription music services and ad-supported streaming. That’s a big chunk of the €7.4 billion ($8.7 billion) it brought in overall.

Analysts at UBS have called UMG a “unique low risk high growth asset” for those looking to cash in on the streaming moment. The bank pointed out in a recent note to clients that the label not only has “an irreplaceable deep catalogue,” but also represents the industry’s top current talent.

Global market angst sends bitcoin lower

Pressure on global markets never seems to be good news for cryptocurrencies. This time has been no exception.

Bitcoin dropped as low as $40,267 in the last 24 hours before pushing back above $43,000, according to data from Coindesk. It’s still off almost 4% during that period.

Evergrande “is putting a tremendous dent in risk appetite that is sending everything lower,” Oanda senior market analyst Edward Moya told clients.

He added that cryptocurrencies have performed well this year “despite all the volatility.” That means “it should not surprise Wall Street they are the first asset sold in the beginning of China-driven market selloff” as investors take some cash off the table.

Watch this space: Not everyone is banking profits, however. Nayib Bukele, the president of El Salvador — which recently became the world’s first country to adopt the bitcoin as legal tender — said Monday that the country purchased 150 additional bitcoins, bringing its total holdings to 700 coins.

“They can never beat you if you buy the dips,” he tweeted.

Up next

AutoZone (AZO) reports results before US markets open. Adobe (ADBE), FedEx and Stitch Fix (SFIX) follow after the close.

Also today: US housing starts and building permits for August post at 8:30 a.m. ET.

Coming tomorrow: The latest policy decision from the Federal Reserve.



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FreshKorn Cryptocurrency

Stocks rebound after Omicron plunge

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Reports of the new Omicron variant of the coronavirus brought back memories of last summer when the fast-spreading Delta variant put a dent in the recovery and consumer confidence. This spooked investors on a traditionally quiet day in the market following Thanksgiving, leading to one of the worst days for stocks this year.
The Dow (INDU) logged its worst day since October 2020, while the S&P 500 (SPX) had its worst performance since February. The Nasdaq Composite (COMP) recorded its steepest fall since September.

But just as the market quickly bounced back from its Delta fears, history appears to be repeating itself: Investors are taking a breath and sensing a buying opportunity.

The market opened in the green, with all three indexes sharply higher. The Dow opened up 375 points, or 1.1%, while the S&P rose 1.2%. The Nasdaq was 1.5% higher.

Other asset classes that were battered Friday — notably oil and cryptocurrencies — also recovered.

US oil prices were up 6.7%, or almost $5, at $72.69 per barrel around the time of the stock market open. That doesn’t totally make up for Friday’s drop, but it takes back a chunk of it.

The global oil benchmark Brent was up 5.7% at $76.84 per barrel.

Bitcoin was up more than 5%.

“Investors are trying to make sense of the latest Omicron Covid strain, but at this point more seems to be unknown than known,” said analysts at Bespoke Investments. “Clouding things even more, we’re unlikely to have definitive answers in the immediate future.”



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Stocks tumble as fears over new Covid-19 variant grip global markets

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US equities took a dive at the open and continued their downward path in the first half hour of trading, with the Dow more some 900 points lower. Oil prices were also badly hit.

Over the summer, the Delta variant spooked consumers and weighed on sectors like leisure and hospitality. Now investors and economists worry this new variant could do the same.

Wall Street was deep in the red early Friday, with the Dow (INDU) falling 2.5%, or about 900 points, in what is shaping up to be a volatile session. The broader S&P 500 (SPX) tumbled 1.8% and the Nasdaq Composite (COMP) opened down 1.3%.

It’s a shortened trading session as the New York Stock Exchange will close at 1 pm ET after being closed Thursday for Thanksgiving. Reduced trading volume during this half-day session is also likely to exacerbate the swings in the market.

Nevertheless, it could shape up to be one of the worst days of the year for stocks.

But it’s not just stocks that are getting a beating.

Oil prices are tumbling as well. US oil futures fell 7.4%, or nearly $6, to $72.51 per barrel around the time of the stock market open. The global benchmark Brent dropped 6.8% to $76.63 per barrel.

The US dollar, measured by the ICE US Dollar Index, which pegs it against its main rivals, was down 0.6% Friday morning.

Cryptocurrencies also felt the heat, dropping across the board. Bitcoin was down nearly 7% around the time of the stock market open, according to CoinDesk data.

Meanwhile, investors are pushing into safe haven investments. The 10-year US Treasury bond got more expensive and yields fell more than 0.1 percentage points to 1.52% Friday morning. Gold prices also jumped.



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FreshKorn Cryptocurrency

‘NFT’ is Collins Dictionary’s Word of the Year for 2021, beating out ‘crypto’ and ‘cheugy’

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Written by Jack Guy, CNNLondon

“NFT,” the abbreviation of “non-fungible token,” has been named Word of the Year by dictionary publisher Collins, beating “crypto” and “cheugy” to the top spot.

An NFT is “a unique digital certificate, registered in a blockchain, that is used to record ownership of an asset such as an artwork or a collectible,” according to a blog post from Collins, published Wednesday.

Acting like virtual signatures, NFTs prove the authenticity of an artwork as the blockchain serves as incorruptible proof of ownership, meaning that “original” artworks and their owners can always be identified via the blockchain, even if an image or video is widely replicated.

They also provide scarcity, and as a result the digital art market has been booming.
In March, a digital artwork named “Everydays: The First 5000 days” sold for $69.3 million via Christie’s, making its creator, graphic designer Mike Winkelmann, better known as Beeple, one of the art market’s most valuable living artists.

The idea of a digital revolution is also captured in another of the dictionary’s candidates for Word of the Year: “crypto,” short for “cryptocurrency,” digital money that is challenging traditional forms of money, according to Collins.

It also named “metaverse” in its blog post, following Facebook’s announcement that it would change its corporate name to Meta.

Other selected words reflect the ongoing coronavirus pandemic, with “double-vaxxed” and “hybrid working” making the shortlist.

“Climate anxiety” reflects growing concern about the damage humans are doing to the planet, while “neopronoun” is a way of referring to a person without using their name or traditional markers of gender, such as “he” and “she.” Collins gives “xe,” “ze” and “ve” as examples of neopronouns.

Rounding out the shortlist are “Regencycore,” which is defined as a fashion aesthetic inspired by the Georgian-era clothing seen in the Netflix show “Bridgerton,” and “cheugy,” which is used to say that something is out of date or uncool.

In 2020, Collins named “lockdown” its Word of the Year, for obvious reasons, and, earlier this month, Oxford Languages made “vax” its pick for 2021.

Defined as “a colloquialism meaning either vaccine or vaccination as a noun and vaccinate as a verb,” vax was relatively rare until this year, the company, which publishes the Oxford English Dictionary, said.

In September, vax appeared more than 72 times more frequently than the year before, said Oxford Languages, which analyzes news content to track changes in the English language.



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