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Mask Mandates, Chinese Gaming Shock, API Inventories - What's Moving Markets

EconomyAug 03, 2021 06:56
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By Geoffrey Smith -- More local governments across the U.S. reintroduce mask mandates to stop the spread of Covid-19, while China's efforts to stop its own outbreak ratchet up another notch. Chinese state media sound off against the videogaming industry, sparking fears of another government campaign against big companies. Eli Lilly (NYSE:LLY) and Amgen (NASDAQ:AMGN) head a cast of thousands reporting earnings, while Sanofi (PA:SASY) (NASDAQ:SNY) bets over $3 billion on a startup mRNA technology specialist. Here's what you need to know in financial markets on Tuesday, 3rd August

1. Return of the mask mandate

More local governments across the U.S. reintroduced mask mandates and some moved closer toward mandating vaccination, as the number of Covid-19 cases continued to rise.

Louisiana, which has the highest proportion of new cases relative to population in the country, issued a statewide mask mandate for indoor spaces through the rest of the month. Seven Bay Area counties also took a similar step, meaning that around half of Californians are now subject to such restrictions.

New York City refrained from issuing a mask mandate, but rather recommended that people wear masks. Facebook (NASDAQ:FB) said it will make mask-wearing compulsory for all staff on its campus, while McDonald's (NYSE:MCD) will ask the same of both staff and customers in its restaurants.

Elsewhere, Beijing banned train arrivals from over 20 provinces as the country’s own Covid-19 outbreak spread further.

2. Chinese gaming stocks tumble after 'opium' criticism from state media

Shares in China’s biggest videogaming companies tumbled after a state-owned daily published a blistering critique of their products, calling them “opium for the mind”.

The article was published in Economic Information Daily an offshoot of the official news agency Xinhua. It was subsequently taken down from the Daily’s website but remains in the printed edition.

The opium analogy has a particular political resonance due to its associations of China’s perceived humiliation at the hands of British opium traders in the 19th century.

NetEase (NASDAQ:NTES) ADRs were down 8.8% in premarket trading, while Tencent  (OTC:TCEHY)stock in Hong Kong fell 6.6%

3. Stocks set to open higher, Fed speeches, earnings eyed

U.S. stock markets are set to open higher later, making good Monday’s losses on fears that the pandemic could cause a fresh slowdown in growth both in the U.S. and internationally.

By 6:15 AM (1015 GMT), Dow Jones futures were up 148 points, or 0.4%, while S&P 500 futures were up by a similar amount and NASDAQ Futures were up 0.2%.

Another barrage of earnings is underway, with Willis Towers Watson (NASDAQ:WLTW), Gartner (NYSE:IT) and DuPont (NYSE:DD) all already beating expectations. Eli Lilly (NYSE:LLY) is the biggest company to report before the open, while Amgen (NASDAQ:AMGN), Activision Blizzard (NASDAQ:ATVI) and Match Group (NASDAQ:MTCH) all report late.

The Federal Reserve's Richard Clarida and Michelle Bowman both speak at 2PM ET, while factory orders for July are the top economic data release at 10 AM. 

4. Sanofi bets on mRNA specialist

Sanofi (NASDAQ:SNY)agreed to buy Translate Bio (NASDAQ:TBIO) for $3.2 billion, in a bet that the messenger RNA technology that is behind the world’s most effective Covid-19 vaccines will have a similar impact in other areas too.

The French company’s bid was over 50% above Monday’s closing price and was over 23 times Translate Bio’s 2020 annual revenue. Sanofi stock edged higher by 0.3% in premarket trading, amid some concern at the price tag.

For context, Moderna’s first-quarter revenue went from $8 million last year to $1.9 billion this year.

5 Oil bounces after growth jitters, API inventories due

Crude oil prices recovered somewhat overnight after tumbling on Monday on concern that China’s draconian measures to stifle the latest Covid-19 outbreak would dent short-term demand again.

By 6:30 AM ET, U.S. crude futures were up 0.5% at $71.61 a barrel, while Brent futures were up 0.5% at $73.26 a barrel.

The mood was also lifted by U.K. major BP (NYSE:BP) returning to profit and announcing higher dividends and a new buyback program. ConocoPhillips (NYSE:COP), Occidental (NYSE:OXY) and Devon Energy (NYSE:DVN) all report in the course of the day.  

The American Petroleum Institute will release its weekly assessment of crude stockpiles at 4:30 PM ET as usual.



Mask Mandates, Chinese Gaming Shock, API Inventories - What's Moving Markets

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