Stocks, futures drop with focus on China, earnings

Bloomberg

Stocks fall with US futures on Monday at the start of a busy week of earnings and policy updates, with China’s widening technology crackdown weighing on risk sentiment. Treasuries rise.
Contracts on key US gauges slipped following a record close for Wall Street. European equities fall from an all-time high as carmakers and banks led losses. Shares in China and Hong Kong tumbled amid a selloff in education tech companies after Beijing announced sweeping reforms of the industry.
Treasuries moved higher as traders braced for possible turbulence from this week’s Federal Reserve meeting, at which officials will likely discuss the outlook for stimulus. Further market cues may also come from a slew of earnings due from Wall street giants including Apple Inc and Tesla Inc.
While investors have cheered a positive start to the earnings season so far, concerns linger about inflation and the threat to economic growth from the rising delta virus variant. That’s weighed on value stocks, while growth peers are outperforming.
“The second half of the year is going to be this glass half-full, half-empty context” spanning monetary and fiscal support and good earnings but also concern about the virus, Virginie Maisonneuve, Allianz Global Investors global chief investment officer for equities, said on Bloomberg Television.
Trade tension is on the radar too. China lashed out at US policies in a tense start to high-level talks in Tianjin, declaring the relationship between the world’s two largest economies in a “stalemate.”
Elsewhere, Bitcoin jumped towards $40,000, continuing a recent rally. Cryptocurrency-linked stocks including MicroStrategy Inc and Coinbase Global Inc also climbed in US premarket trade.
Crude oil declined, while the Japanese yen outperformed in the Group-of-10 currencies amid a mood of caution.
The Stoxx Europe 600 fall 0.4% as of 9:46 am London time and futures on the S&P 500 also drop 0.4%.
While, futures on the Nasdaq 100 fall 0.2%, futures on the Dow Jones Industrial Average also slumped 0.6%. The MSCI Asia Pacific Index falls 1% and the MSCI Emerging Markets Index also drops 2.1%.
The Bloomberg Dollar Spot Index was little changed and the euro was little changed at $1.1779.
While the Japanese yen rises 0.3% to 110.25 per dollar, the offshore yuan falls 0.1% to 6.4855 per dollar. However, the British pound rises as much as 0.2% to $1.3769.
The yield on 10-year Treasuries declined four basis points to 1.23% and Germany’s 10-year yield declined two basis points to -0.44%. Britain’s 10-year yield declined three basis points to 0.55%
While Brent crude falls 1.2% to $73.21 a barrel, spot gold rises 0.4% to $1,809.18 an ounce.