The CSI 300, a gauge of the largest 300 stocks listed on the Shanghai and Shenzhen stock exchanges, is up 16% YTD as investors highlight an “air of euphoria” in the markets, according to the Financial Times. However, as investors pile into the market, there are concerns that the state-backed rally is mirroring a spike and collapse seen in 2015.
And they’re off
Markets opened boldly this week as the start of earnings season kicked off with a bang (see JPMorgan and Delta earnings analysis, below). Indices across Asia climbed yesterday — the Nikkei 225 led the pack — and in Europe, markets were also positive. US benchmarks also started off well, if a little less so than global counterparts. Recently, Goldman Sachs showed optimism for the S&P 500 by increasing its earnings forecast, but stressed the importance of ongoing management commentary on gauging outlook, according to Bloomberg.
- FTSE 100 – 6,176.19 (+1.33%)
- Dow Jones – 26,590.34 (+1.98%)
- S&P 500 – 3,230.95 (+1.44%)
- NASDAQ – 11,023.05 (+1.72%)
- Stoxx 600 – 370.46 (+0.99%)
- SSE Index – 3,443.29 (+1.77%)
Earnings preview: JPMorgan
The bank suffered in Q1, hit by loan defaults and reporting lower-than-expected profits. The stock has traded just above the S&P 500 at the start of July and investors will be keen to see if a strong earnings call for Q2 will drive it up. Watch out for JPMorgan’s earnings report, expected later today.
A risky game
Game developers Codemasters, Team17 and Frontier Developments have seen YTD gains of 19.4%, 39.7% and 47.3%, respectively. However, there are concerns over the working conditions faced by those tasked with producing the games, according to the Financial Times. Advocacy group Games Workers Unite described a “rush to the bottom” for freelancers or contract workers.
Earnings preview: Delta Airlines
The embattled airline stock entered freefall during the coronavirus pandemic. For bargain hunters, the stock looks attractive, but as Morningstar’s Brian Bernard notes, it’s hard to say with any certainty when air traffic will return.
Will WeWork work?
According to its chairman, it will, and sooner than expected. Marcelo Claure told the Financial Times that the company expects to achieve positive cash flow in 2021, a year ahead of schedule. Recently, WeWork has cut its workforce by 8,000, sold assets and renegotiated leases. Claure pointed to increased demand for its workspaces during the coronavirus pandemic.
The power of Chinese data centre stocks
A recent push for better cloud-computing infrastructure by China has benefited the country’s data centre stocks, according to The Wall Street Journal. Nasdaq-listed GDS Holdings gained as much as 55.5% for the year to 13 July, while its smaller rival 21Vianet Group saw a massive 249% spike in the same period.
Brazilian stock-buying spree
Investors have not been deterred by Brazil’s shocking COVID-19 figures. In June, net inflows reached BRL343m, their highest level since December, according to local stock market operator B3 and reported by The Wall Street Journal. Foreign investors held a whopping 47% of shares traded in the country.