By Geoffrey Smith
Investing.com - Another day, another dive for Chinese equities after more sectors come in for criticism from state media. Gazprom (MCX:GAZP) triggers a 10% drop in European natural gas prices. Johnson & Johnson (NYSE:JNJ) will have a new CEO and Spotify (NYSE:SPOT) has a new buyback, but U.S. stocks are set to open lower again. And Elon Musk wants to make a humanoid robot prototype next year. Here's what you need to know in financial markets on Friday, August 20th.
1. Chinese stocks tumble on more regulation fears
Chinese stocks tumbled again, with the Hang Seng index losing another 1.8% to a 10-month low and the FTSE China A50 index falling 2.9% as state media raised fears of tighter regulation of a much broader part of the economy in future.
Media reports complained of too-lax regulation in sectors such as online pharmacies, liquor and cosmetics – businesses far removed from the data-centric Internet platforms that have borne the brunt of most of the recent regulatory initiatives.
However, Beijing isn’t letting up on those companies either. It enacted a new data protection law on Friday similar to the Global Data Protection Regulation in Europe and expected to be one of the world’s tightest and most actively enforced laws on data privacy. Alibaba’s Hong Kong shares fell 2.6% to a new record low.
2. Gazprom signals relief to European gas markets
Natural gas prices in Europe plummeted after Gazprom indicated that gas may start flowing through the new Nord Stream 2 pipeline before the end of this year.
Natural Gas Futures in London fell 10.6%, but remain near historic highs after a blistering rally this year that has been driven by the fact that Gazprom has reduced supplies to central and western Europe. While it attributed the move to technical factors, many analysts have seen it as a way of pressuring the European Union to give its final blessing to the pipeline.
The accelerated closure of coal-fired electricity plants across the continent has also contributed to higher prices this year.
3. U.S. stocks set to open lower; J&J, Spotify in focus
U.S. stock markets are expected to resume their downward drift when they open later, despite eking out modest gains on Thursday after a rocky start to the day.
By 6:15 AM ET (1015 GMT), Dow Jones futures were down 147 points, or 0.4%, while S&P 500 futures were down by a similar amount and Nasdaq 100 futures were down slightly less, by 0.2%.
Tech-heavy Nasdaq indices have performed marginally better this week, as the more cyclical stocks in the two other main indices have been hit harder by fears about the continued spread of Covid-19, both at home and further afield.
In focus later will be Facebook (NASDAQ:FB), which faces a revived antitrust lawsuit from the Federal Trade Commission, and Spotify, which unexpectedly announced a $1 billion buyback program. Johnson & Johnson’s decision to promote an insider to the CEO job will also garner attention.
Deere (NYSE:DE) & Co. and Foot Locker (NYSE:FL) head a slimmed down earnings roster.
4. Musk's robot diversion
Tesla (NASDAQ:TSLA) CEO Elon Musk found a way to distract attention away from the National Highway Transportation Safety Administration’s investigation into its Autopilot software.
Musk told an investor event grandly titled “AI Day” on Thursday that the company will likely build a humanoid robot prototype next year, designed to do boring and repetitive tasks that people prefer not to do.
Musk also revealed more information about the chips that it has designed in-house to help power its self-driving technology, but gave no timeframe for when the company will be able to offer solutions that don’t require the intervention of a human driver.
5. Oil falls again ahead of rig count, CFTC data
Oil prices are on track for a weekly loss of over 10% after giving up further ground overnight on a combination of demand fears and a stronger dollar.
However, most base metals were slightly higher, stabilizing at the end of a rough week dominated by the news of cuts to Chinese steel output, ostensibly to curb pollution.
By 6:20 AM ET, U.S. crude futures were down 0.7% at $63.09 a barrel, while Brent futures, the global benchmark, were down 0.7% at $66 a barrel. Baker Hughes’ rig count data will be released later amid signs that the shale industry is responding to this year’s rally by modestly increasing output. The Commodity Futures Trading Commission’s data on net positioning by hedge funds and money manager are likely to show another sharp fall in longs, however.