Wall Street stocks end win streak on China tech jitters

Wall Street snapped a five-day win streak overnight, after yesterday’s volatility drove a drop in big-tech stocks. US listed Chinese companies plunged, dragging with them the broader tech-space, as the regulatory crackdown from Chinese authorities on its private sector forced portfolio managers to liquidate tech exposure in their portfolios. The US Tech 100 ended the night’s trade 1.21% lower, though the index did finish off the day’s lows, with investors “buying the dip” at its 20-day moving average.

Apple, Microsoft and Alphabet post mixed results

The negativity towards US tech stocks continued after the closing bell, after Apple Inc, Microsoft Corp (All Sessions) and Alphabet Inc - C (All Sessions) delivered its quarterly results. Though all three beat earnings and revenue estimates, only Alphabet shares rallied in post market trade. Apple shares dropped after the company refrained from giving guidance and warned of slowing growth and further supply constraints. While Microsoft shares fell after the company flagged a slowdown in its Azure cloud services business.

Australian CPI data

Quarterly CPI dropped in Australian today, and showed a very strong result. Prices were shown to have expanded by 3.8% on annualised basis, exceeding the 3.5% consensus estimate. The reaction in markets was muted however, with the AUD/USD dropping following the data, with market participants seeing the high inflation as mostly due to temporary factors. The stronger inflation pulse is also considered unlikely to influence the Reserve Bank of Australia policy, given the major hit to future growth from the recent lockdowns in New South Wales.

ASX200

Nervousness in broader financial markets has put Australian investors on the back foot today, as Wall Street’ weak lead overnight, caused by concerns regarding China’s crackdown on its tech sector, keep investors on their toes. The Australia 200 has pulled back from record highs, in a day’s trade that has seen every sector trade into negative territory, with the IT sector unsurprisingly the market’s biggest underperformer.

Markets turn attention to US Federal Reserve meeting

Focus turns in markets now to tomorrow morning’s US Federal Reserve meeting, at which the central bank is tipped to keep policy unchanged. With the policy outcome all but certain, the interest in this meeting is in what the Fed says about its policy settings going forward. After last month’s so called “hawkish pivot”, market participants are looking for clues about the timing of QE-tapering and rate hikes, especially as some concern has developed in recent weeks that the US economy’s expansion could be slowing down.

Do you have a view on the markets? Whatever you think, you can use CFDs to trade stocks and other assets, through IG’s world-class trading platform.

For example, to buy (long) or sell (short) a variety of local and international stocks using CFDs, follow these easy steps:

• Create an IG Trading Account or log in to your existing account
• Enter <Company name> in the search bar and select it
• Choose your position size
• Click on ‘buy’ or ‘sell’ in the deal ticket
• Confirm the trade

For investors not looking to trade stocks, you can invest in shares directly through our share trading service.

Kyle Rodda | Market Analyst, Australia 
28 July 2021