Investors stay calm as the Fed and China soothe

It can be hard to get investors excited in July. Seems like killer earnings, a breakthrough in infrastructure talks, and the Fed still buying good debt after bad are still not enough to get them into a buying mood.

And so, after a day in which all three big U.S. Market indexes were mostly flat, premarket trading in New York is…mostly flat. Though perhaps investors are right to take a break: Fed Chair Jerome Powell’s comments and the FOMC’s statement were pretty much what was expected; the Fed could dial back its aggressive bond-buying program later this year, but not yet.

As Deutsche Bank’s research team put it, “In spite of being the most anticipated event of the week, the Federal Reserve’s latest policy decision proved to be a much tamer event than the last meeting as far as markets were concerned.”

Facebook’s warning that Apple’s new privacy rules could hurt its targeted ads business, and talk that SoftBank will unload a chunk of Uber, also haven’t helped investor enthusiasm either this morning, even in light of news that the Senate will move forward on Biden’s Very Big Infrastructure Bill. Plus, investors have another massive day of earnings to get through (Hello, Amazon). Pause. Breathe.

Europe’s markets are a different story, however, with bourses across the continent rising, albeit in a subtle, orderly, Old World way. Shell’s earnings announcement this morning, which included news that it will raise dividends by nearly 40% and spend $2 billion on buybacks amid soaring oil prices, did not hurt.

Asian markets bounced back after days of investor punishment, aided by a Bloomberg report that noted China’s securities regulator, uncomfortable with the recent selloff, had held a call with executives from major investment banks to signal the crackdown on private education wasn’t intended to hurt other sectors.

The regulator, China Securities Regulatory Commission vice chairman Fang Xinghai, apparently also told those on the call that China still would allow its domestic firms to go public in the U.S.

Now let’s see what’s moving markets.

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Asia

Asian markets rebounded after fears over China’s recent regulatory crackdown were assuaged. Hong Kong’s Hang Seng managed to climb 3.3% and the Shanghai Composite rose 1.5%.

The news that China would still allow its domestic firms to go public in the U.S. Helped swing the Hang Seng TECH index up by 8% today.

Shares in SoftBank Group rose 4.1% as the Japanese conglomerate was reported to be looking at selling off a third of its stake in Uber to make up for losses on its Chinese counterpart Didi. The Nikkei overall advanced 0.7%.

Korea’s Samsung Group has reported a 73.4% surge in profits thanks to higher chip prices and COVID-19-led demand, putting them alongside other tech companies Apple, Alphabet, and Microsoft that soared during the pandemic.

Europe

Following the Fed’s dovish announcement, European markets have a strong morning on the whole, with the Stoxx Europe 600 gaining 0.3% in early trades—recovering from the previous day’s losses and hitting an all-time high.

Another big day in European earning results, with Credit Suisse, Royal Dutch Shell, TotalEnergies, Volkswagen, L’Oréal, Merck, and Airbus all reporting today.

Credit Suisse Group reported a larger-than-expected drop in second-quarter profits as the aftershocks of the Archegos Capital Management and Greensill scandals continue to rock its investment bank and wealth management businesses. In the end, the group’s investigation into the scandals revealed multiple failings but no “fraudulent or illegal conduct.”

U.S.

Investors have generally welcomed dovish (and expected) sentiments from the Federal Open Market Committee, which decided to keep interest rates near zero. The Nasdaq rose 0.7% yesterday and has stayed flat in premarket trading.

Technology companies outperformed others on Wednesday, with the FANG+ index up 1.75%. But enthusiasm for Facebook earnings, reported after close of trading, was less than strong as investors worried that the social media giant’s ad revenues would be hurt by Apple’s new data-collection rules. The company’s share price was down almost 4% in premarket trading.

Amazon reports earnings today with analysts fearing lockdown easing will trigger an e-commerce slowdown. Other earning reports include Anheuser-Busch Companies, Mastercard, Comcast, and T-Mobile.