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U.S. Opening Bell: Evergrande, Inflation Drive Global Market Slide; Bitcoin Higher

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  • Evergrande in a tailspin after deal collapses, weighing on markets
  • Dollar rallies despite falling yields
  • Bitcoin retains record highs

Key Events

Stocks and US futures on the Dow, S&P, NASDAQ and Russell 2000 sold off on Thursday after Chinese real estate developer, Evergrande announced that the sale of a significant stake in its property management group—in order to shore up the company’s teetering financial stability—had collapsed, adding to traders’ concerns about markets and rising global inflation.

Treasury yields fell but the dollar advanced.

Global Financial Affairs

All four US contracts were trading in the red this morning, with the Russell most deeply in negative territory.

The STOXX 600 Index slipped from its highest levels in six weeks, following the earlier Asian selloff—which saw the Hang Seng decline 0.5%—on news of the collapse of a $2.6 billion sale of the property management arm of the beleaguered Evergrande Group (HK:3333). The shares slumped 12.5%, on the announcement while Evergrande Property Services Group (HK:6666) slid 8%.

Miners, automakers and industrial stocks pulled down the pan-European benchmark—sectors sensitive to the economic recovery—as investors worry about future corporate earnings in an economy battling the highest inflation in years.

Yesterday’s uneven US session saw the S&P 500 inch toward its record high, but the NASDAQ 100 retreated, imbuing markets with a cautious air.

Despite a slide in 10-year Treasury yields, the dollar gained.

Dollar Index Daily

Dollar Index Daily

The USD bounced off the neckline of a massive double bottom. If prices close at the level at which they are now, they will have developed a bullish hammer.

Gold managed to hold on to yesterday’s gains despite the strength of the greenback.

Gold Daily

Gold Daily

Still, the yellow metal gave up an advance after the 100 DMA crossed below the 200 DMA as it neared the neckline of a H&S continuation pattern.

Bitcoin bulls had a great day on Wednesday as the cryptocurrency’s price finally broke through the $66,000 level.

Today, the digital token managed to hit yesterday’s closing price after a small dip. JPMorgan notes the surge in demand has been fueled by inflation.

Much of the current exuberance has been attributed to the launch, on Tuesday of the ProShares Bitcoin Strategy ETF (NYSE:BITO) which topped $1 billion in assets in just two days.

Presumably, speculators are enjoying the fun ahead of the launch of a second US Bitcoin ETF, the Valkyrie Bitcoin Strategy ETF (BTF) on Friday with others due to follow next week.

Bitcoin Daily

Bitcoin Daily

The price of the leading crypto formed a Hanging Man. That’s bearish upon a close and a confirming candle, which would occur if the price closes below the real body of today’s candle. Bulls may be exhausted after BTC’s incredible 60% vault since late September.

The cryptocurrency is likely to correct and find support at the top of the broken rising channel before taking on new heights.

Oil is falling from a 7-year high due to a surprise drop in stockpiles. However, the current energy crisis in Europe and Asia may drive an increase in demand for oil as an available alternative to natural gas.

Oil Daily

Oil Daily

When the price of an asset falls despite supposed bullish news, it’s bearish. The oil price is falling after forming a hanging man yesterday. Preferably, the hanging man would not have had any upper shadow, but if the price today closes below yesterday’s opening level, it might be a bearish signal.

The RSI is turning lower after reaching the most overbought condition since February so the next support will probably be the uptrend line at around $80.

Up Ahead

  • German manufacturing PMI is reported on Friday.
  • Canada releases retail sales figures for August on Friday.
  • On Friday Fed Chair Jerome Powell takes part in a policy panel discussion.

Market Moves

Stocks

  • The FTSE 100 was lower by 0.5%
  • The STOXX 600 fell 0.1% as of 8:49 a.m. London time
  • Futures on the S&P 500 fell 0.2%
  • Futures on the NASDAQ 100 fell 0.2%
  • Futures on the Dow Jones Industrial Average fell 0.2%
  • The MSCI Asia Pacific Index rose 0.4%
  • The MSCI Emerging Markets Index rose 0.5%

Currencies

Bonds

  • Britain’s 10-year yield was little changed at 1.15%
  • The yield on 10-year Treasuries was little changed at 1.65%
  • Germany’s 10-year yield was little changed at -0.13%

Commodities

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