- After US stocks logged all-time highs last week, futures point to a retreat on Monday.
- Asian stocks plunged as China tightened rules on its education and property sectors.
- Bitcoin rose above $US38,000 ($AU51,671), partly driven by speculation that Amazon may accept it as payment.
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US stocks looked set to open in the red on Monday ahead of Tesla’s second-quarter earnings, as Asian equities plunged to a yearly low over tighter government regulations.
Over one third of the S&P 500 companies are set to report earnings results this week, including the biggest tech firms. Elon Musk’s electric-vehicle maker kicks off on Monday, followed by Alphabet, Apple, Microsoft on Tuesday, and Facebook on Wednesday.
Asian markets returned from the weekend on a weaker footing given the series of regulatory crackdowns in China. The tech sector has already been under pressure in recent weeks. But the government has now turned its eye to the education and property sectors. The Communist Party said it would notably improve irregularities in the property market within three years.
New rules could also bring reform to the education tech sector, banning companies that teach school subjects from making profits, raising capital, or going public. This has been implemented to reduce financial pressure on families, and incentivize them to have more children.
“Given that the China tech crackdown has already frayed investors nerves along with credit concerns, particularly in the property development sector, the last moves by the central government in the education sector, which threaten to wipe out billions of dollars by overseas investors, is another ratchet higher in the regulatory risk landscape in China,” Jeffrey Halley, a senior market analyst at OANDA, said.
Separately, shares in Chinese tech firm Tencent fell 3% after the government ordered it to give up exclusive music-streaming rights with record labels around the world after finding it violated anti-trust laws.
European stocks also retreated as investors awaited the Federal Reserve’s meeting on Wednesday for clues on the outlook for US monetary policy, including the timing of when the central bank might begin tapering its asset purchases.
German business sentiment fell unexpectedly in July over concerns over the supply chain and rising coronavirus infections in the region.
Bitcoin surged to top $US38,000 ($AU51,671) after a string of bullish developments, including talk of Amazon getting involved with digital currencies.
“Given the might of Amazon Web Services, it isn’t surprising that the tech giant wants to be at the cutting edge of new payments technology and establishing a new digital currency is likely to be on the agenda,” Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown said. “But the expectation that payment may also be accepted from the current crypto kids on the block has also led to a spike in their value.”