On the 19th, global stock markets were falling!
During the day on July 19th, Beijing time, the Asia-Pacific market closed. The Vietnamese stock market plummeted by nearly 4%, and the stock markets of Japan, South Korea and Hong Kong closed sharply lower. The U.S. and European stocks that opened on the evening of the 19th fell even more miserably!
US stocks fell 800 points intraday, and the panic index soared
On July 19, the three major U.S. stock indexes collectively opened lower, with the Dow once falling by more than 800 points.
As of the close, the declines of the three major indexes narrowed.
Among the well-known technology stocks, Apple fell 2.69%; Facebook fell 1.23%; Amazon fell 0.67%; Microsoft fell 1.33%; Google fell 1.97%; Netflix rose 0.37%; Tesla rose 0.31%.
Most of the popular Chinese concept stocks fell, with the Chinese concept ETFs KWEB and CQQQ falling by more than 2% and 1% respectively. New Oriental fell more than 9%, Didi Chuxing fell more than 7%, Gaotu fell more than 6%, TAL fell more than 5%, Douyu fell more than 3%, Pinduoduo, Tencent Music and Tencent ADR fell more than 2%, Alibaba fell more than 1%. Three new energy vehicle stocks turned higher during the session. NIO and Xpeng Motors closed up more than 1%, and Li Auto rose more than 0.7%.
China concept stocks with the largest declines:
The “fear index” that measures the fluctuations of US stocks – Cboe’s Volatility Index VIX It rose more than 30% and closed up nearly 22%, closing above 19.00 points for the first time since May 21.
Due to the strong risk aversion of U.S. stock investors and their influx into the bond market, the yields on long-term U.S. Treasury bonds have fallen to some extent. During the session, the U.S. 10-year Treasury bond yield once fell below 1.2%, a new low since February 16; the U.S. 30-year Treasury bond yield fell to 1.841%, the lowest level since February 1.
European stocks and crude oil also collapsed!
European stock markets also fell across the board on Monday, with the European Stoxx Index falling by nearly 3%. The major European stock indexes all opened lower and moved lower, with declines of more than 2%.
The crude oil market has been hit hard.
US WTI August crude oil futures closed down 7.50% at US$66.42/barrel, setting a new closing low since May 28 this year and the highest monthly closing price since September 8 last year. The contract’s maximum closing decline.
Brent September crude oil futures closed down 6.75% at US$68.62/barrel, setting a new closing low since May 24 this year and the main trend since March 18 this year. The contract’s maximum closing decline.
After several negotiations broke down, OPEC+ finally reached an agreement on increasing production. The organization announced that starting from August, the overall Production capacity will be increased by 400,000 barrels per day per month until the existing 5.8 million barrels per day production reduction limit is fully replenished. The goal is to completely end the production reduction in September 2022. It is worth mentioning that OPEC+ also stated that the specific production reduction situation still needs to be determined by the market, and a meeting will be held in December this year to evaluate the situation.
Why did it plummet?
Resurgence of epidemic unnerves global investors
Monday’s pressure on global stock markets was largely attributed to global COVID-19 infections Cases continue to rise. “The market appears to be grappling with concerns that despite widespread vaccinations in major economies, the But the virus still won’t go away.” He added: “New, more resilient virus mutations may be a permanent phenomenon that will cause serious damage, especially in developing countries, and ultimately lead to economic recovery. Suppressed. The overwhelming ‘firepower’ from governments and central banks is enough to fight the epidemic, but not enough to eliminate it.”
The resurgence of the new coronavirus epidemic has unsettled global investors , they are considering whether new restrictions on sales will weaken the economic rebound and reverse a stock market rally that has pushed stocks to record levels.
Matt Miskin, co-chief investment strategist at John Hancock Investment Management, believes that investors are turning to U.S. Treasury bonds and other “Better assets” makes sense. He said in an interview: “We are in a decelerating growth environment.”
Due to the spread of the Delta variant strain and the slow vaccination work, there are signs of a recent rebound in the US epidemic continued. According to statistics from Johns Hopkins University, all 50 states and Washington, D.C., have newThe number of new confirmed cases of COVID-19 is growing. The average growth rate in the past seven days was 10% higher than the previous week, and 38 states had a growth rate of more than 50%. In Mississippi, located in the southern United States, the total number of confirmed cases in the state is currently close to 330,000, and many epidemic numbers in the state have been rising recently.
Woodward, an expert at the University of Mississippi Medical Center, said: What we can see now is an increase in the number of cases, just like many other states. The number of new cases is increasing, the number of hospitalized patients is increasing, and the number of severe cases is increasing.
On the 19th local time, according to French media reports, the situation of the new coronavirus epidemic in France is becoming increasingly severe. There are 37 provinces in France with new coronavirus infection rates exceeding the warning level. Among the current 37 provinces, the provinces that are popular for tourism are the areas with relatively severe epidemics. Among them, the infection rate in Pyrenees Oriental reached 299.6 infections per 100,000 people, the highest among all provinces. According to France’s relevant health regulations, if the number of new coronavirus infections exceeds 50 per 100,000 people in the past seven days, it has reached the early warning level.
The UK ended more than a year of anti-epidemic restrictions on the 19th, but this has been disrupted by a surge in the number of infections, warnings of supermarket supply shortages and Prime Minister Johnson’s self-isolation. COVID-19 infections are currently rising rapidly in most parts of the UK. On the 18th local time, there were 48,161 new confirmed cases of COVID-19 in the UK. The number of newly confirmed cases in a single day has exceeded 40,000 for five consecutive days. Among them, the number of new confirmed cases in a single day on July 16 has exceeded 40,000. The number of infections exceeds 50,000, which is also a new high since January this year.
Trend of new confirmed cases in the UK, source: wind
After the Netherlands relaxed all restrictions, there were new cases in a single day two weeks later Cases soared from 500 to 10,000, and the Dutch government had to change its measures and is now nervously waiting to see how hospitalizations will turn out.
In the Asia-Pacific market, Vietnam’s stock market fell 4.29% on Monday, hitting a two-month low. According to CCTV news, the current epidemic in Vietnam has continued to spread since the outbreak at the end of April. According to a report by the Vietnamese Ministry of Health on the 18th, in the past 24 hours, Vietnam had 5,926 new confirmed cases of new coronary pneumonia, setting a new high in the number of newly confirmed cases in a single day since the outbreak, with a total of 53,830 confirmed cases; a total of 254 deaths.
An analysis conducted by Singapore’s “Lianhe Zaobao” citing data from Johns Hopkins University on the 16th showed that in the face of the fast-spreading Delta strain, coupled with the new crown vaccine, Progress is slow, and Southeast Asia is becoming one of the hardest-hit areas by the global epidemic. Confirmed cases in Southeast Asia have increased by 41% in the past week, with more than 500,000 new cases. So far, the cumulative number of confirmed cases in Southeast Asia has surpassed Latin America and India, which were previously severely affected.
Trend chart of new confirmed cases in Indonesia, source: wind
What will happen to the market outlook?
Affected by the rebound of the epidemic, investors re-evaluated whether consumer travel will meet expectations, and airline stocks suffered heavy losses on Monday. Shares of Delta Air Lines and American Airlines fell about 4% each, with American Airlines down about 5%.
Major stocks linked to global economic growth also fell. Boeing fell 5%, while General Motors and Caterpillar fell about 2% each.
Mike Wilson, chief U.S. equity strategist at Morgan Stanley, said: “With a clear deceleration in corporate performance and economic growth, the market appears ready to adopt a more defensive character. In In our view, market breadth has been deteriorating in recent months, which is just another example of a mid-cycle transition. It usually ends with a 10%-20% retracement of the index level.”
The Energy Select Sector SPDR index fell 4%, the worst performance among 11 sectors, as oil prices fell due to concerns about slowing economic growth and OPEC+ agreed to begin phasing out production cuts. In terms of individual stocks, ConocoPhillips fell more than 3%, and Exxon Mobil also fell 3%.
The Financial Select Sector SPDR was next, down 2.8%, as falling U.S. Treasury yields affected banks’ profit prospects. JPMorgan Chase fell 3.2% and Bank of America fell 2.6%.
However, despite Monday’s decline, the overall damage to the market was still relatively mild. The S&P 500 is just 3.1% below last week’s all-time high, with investors hoping better-than-expected results will help stocks bottom out.
Billionaire investor Bill Ackman believes that the spread of the Delta variant strain will not pose a major threat to the reopening of the economy because it can speed up the pace of herd immunity. “I hope it motivates people who haven’t been vaccinated to get vaccinated. I don’t think it’s going to change behavior to a great extent. It looks to me like there’s going to be a huge economic boom going on. We’re going to be in this fall. Ushering in a very strong economy.”
Michael Yoshikami, CEO of Destination Wealth Management, believes that there are several factors that are putting pressure on U.S. stocks, such as the possible increase in personal income taxes, valuation The extension makes some investors in the current market overly enthusiastic and the economy will open its doors.
Yoshikami pointed out, “There is indeed too much optimism in the market. However, if you book a ticket to Asia now, see what happens in Japan in terms of the Olympics. Therefore. , I think the Delta variant strain and other issues will put pressure on the market. That’s why we’ve been worried and why we’ve been expecting a 10% correction.”
Analyst Jim Cramer pointed out that the Delta mutant strain is not a major threat to the bull market. “There’s too much fear in the market. I just don’t think asymptomatic infections are that dangerous and the death toll isn’t rising that much, so I don’t think this is the end of the bull market.”
Mi pointed out, “There is indeed too much optimism in the market. However, if you book a ticket to Asia now and see what happens in Japan in terms of the Olympics. Therefore, I think the Delta variant strain and other issues will make the market Under pressure. This is why we have been worried and why we have been expecting a 10% correction.”
Analyst Jim Cramer pointed out that the Delta variant strain is not harmful to the bull market. Not a significant threat. “There’s too much fear in the market. I just don’t think asymptomatic infections are that dangerous and the death toll isn’t rising that much, so I don’t think this is the end of the bull market.”</p
