U.S. Tech Rebounds, China's Stumbles; Oil Surges - What's up in Markets
By Geoffrey Smith
Investing.com -- U.S. tech stocks regain some momentum, but China’s tumble again after Beijing drafts harsh new antitrust measures. Oil prices rebound on signs of strong U.S. demand but watch out for OPEC’s monthly report later. Here’s what you need to know in financial markets on Wednesday, November 11th.
1. Virus surge continues across U.S.
The U.S. broke its records for new cases of Covid-19 and, more ominously, for hospital admissions, as the pandemic continues its seasonal surge.
Nearly 62,000 people are now hospitalized with the virus, with Covid-19 patients accounting for over 20% of all hospital beds in the Dakotas, and over 15% in Wisconsin, Montana, Nebraska and New Mexico.
New Jersey tightened its restrictions on businesses after registering its highest infection numbers since April. Governor Phil Murphy has ordered non-essential businesses to close after 8 PM.
In Europe, too, hospital capacity is coming under increasing strain, notably in France. However, lockdown measures implemented four weeks ago by Ireland, Belgium and the Netherlands are showing clear success in bringing down the rate of new infections.
2. Chinese tech meltdown overshadows Singles Day
China’s tech giants continue to suffer after the introduction of new antitrust regulations by Beijing that could restrict their activities in a number of ways.
China’s State Administration for Market Regulation started a consultation process Tuesday on new regulations that covered a broad range of online commercial practices, notably in the way they offer different prices for the same product to different buyers.
Tencent Holdings (HK:0700)’ Hong Kong shares have fallen 11% since the regulations were published, while Alibaba 's (NYSE:BABA) ADRs fell over 8% on Tuesday and are marked down another 2% in premarket trade.
The regulations have overshadowed the predictable record-breaking numbers from Alibaba’s annual Singles Day marketing event, which generated over $56 billion in sales in its first couple of hours.
3. Stocks set to open higher; tech regains its footing
U.S. stock markets are marked to open higher Wednesday, with U.S. tech names finally recovering after two days of severe underperformance in the wake of Pfizer’s Covid-19 vaccine announcement on Monday.
By 6:30 AM ET (1030 GMT), Dow Jones Futures were up 227 points, or 0.8%, while S&P 500 Futures were up 0.9% and NASDAQ Futures were up 1.1%. Apple (NASDAQ:AAPL) stock was indicated 1.2% higher on the day when it launches its new generation of Mac books, powered by chips that have been developed in-house.
The positive mood is being supported by comments from San Francisco Fed President Mary Daly, who said late on Tuesday that the Fed is in “intense discussions” about its various asset purchase programs. That has stoked speculation that the Fed will step in to provide some support for markets while a lame duck Congress stumbles towards the end of its session.
Air Products (NYSE:APD) leads a fast-thinning lineup of companies reporting Wednesday, as earnings season winds down. Lyft (NASDAQ:LYFT) stock was marked up 5.6% after reporting better-than-expected earnings late on Thursday.
4. China cracks down on Hong Kong amid U.S. policy vacuum
The foreign policy challenges for the new Biden administration are stacking up. Hong Kong’s pro-democracy lawmakers resigned en masse after four of its members were ousted under new laws allowing them to be replaced without a court process.
The U.S. response to evidence of further crackdowns on Hong Kong is likely to be hamstrung by the refusal of the current Trump administration to prepare for the handover of power. Secretary of State Mike Pompeo said on Tuesday that he expected “a smooth transition of power to a second term.”
Elsewhere, TikTok’s parent company ByteDance asked a U.S. court to extend a Thursday deadline for selling the video streaming service to a U.S. company, calling the current deadline “arbitrary and capricious” and complaining that communications from the Committee for Foreign Investment in the U.S. had effectively stopped during the end of the election campaign.
5. Oil surges on API; OPEC monthly report due
Crude oil prices extended their dramatic rally overnight in the wake of data showing a much bigger-than-expected drop in U.S. inventories for the second week running.
By 6:35 AM ET, U.S. crude futures were up 3.1% at $42.62 a barrel, while Brent futures were up 2.9% at $44.88 a barrel.
The American Petroleum Institute said on Tuesday that crude stocks fell by 5.15 million barrels last week, much more than the 900,000 expected.
The API numbers, along with hopes for the 2021 demand outlook in the wake of Pfizer’s vaccine news, have overshadowed the Energy Information Administration’s downward revision to its forecasts on Tuesday. OPEC’s monthly oil report, due for publication at 8 AM ET (1300 GMT), will update the cartel’s supply and demand forecasts.
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