Dow, S&P 500 notch records; Asia dragged down by soft Chinese data
• US stocks kicked off the week by tumbling from last week’s historic highs, as investors weighed geopolitical concerns alongside global economic data. Top of mind for investors was the worsening situation in Afghanistan, signs of a slower economic recovery in China, and a report that the Federal Reserve could begin to pull back some of its support soon. But the Dow Jones Industrial Average and S&P 500 recovered from their early losses in the day to turn positive, with the Dow gaining 0.31%, while the S&P 500 gained 0.26%. Both notched record highs. The Nasdaq Composite, however, remained in the red, down 0.20%.
• The Stoxx 600 Index was down 0.5%, with cyclical sectors like basic resources, travel stocks and energy among the biggest decliners as worries over the spread of the Delta variant and its impact on growth prompted investors to lock in some gains.
• The Delta variant has taken a toll on the economic recovery in China, as growth in industrial, consumer and investment activity slowed in July. Chinese stocks ended mixed, with the Shanghai Composite Index up 0.03% but the CSI Index down 0.10%.
• Risk appetite waned in Hong Kong and Singapore, with the Straits Times Index down 0.63% to finish Monday at 3,145.52, while the Hang Seng Index lost 0.80%. It was a sea of red across the region, with the Nikkei down as well, by 1.62% as the index was dragged by sharp declines in electronics and machinery stocks.
• On the whole, however, the outlook for risk assets remains positive but volatile. The S&P 500 has risen 100.22% since its 2020 closing low on March 23, 2020. Eyes will be on the Federal Reserve this week, as minutes from its July meeting are set to be released on Wednesday night. There were reports that Fed officials were considering ending asset purchases by the middle of next year. The Fed would begin pulling back on its bond-buying in the next three months, the report said, paving the way for the Fed to begin raising interest rates.