US futures swing into the green after sharp tech sell-off, while bonds yields rise ahead of Fed decision
- US futures rose on Wednesday after tech stocks fell sharply the previous day.
- A regulatory crackdown on big companies in China is unnerving global investors.
- The Fed's latest monetary policy decision is in focus, as are Big Tech earnings.
US futures swung into the green on Wednesday as US earnings season rolled on, after China's crackdown on its big companies drove a sharp tech sell-off the day before.
Meanwhile, bond yields moved slightly higher ahead of the latest monetary policy decision by the Federal Reserve, due later Wednesday.
Futures for the tech-heavy Nasdaq 100 fell but then reversed their losses to rise 0.24%, after the linked index dropped 1.21% on Tuesday - its biggest fall in more than two months. S&P 500 futures rose 0.16%, while Dow Jones futures were roughly flat.
China's government has intensified its scrutiny of its major private companies, which has triggered a sharp sell-off in Asian stocks this week.
The government has brought in a complete overhaul of its $100 billion private education sector, which will ban profits for companies that teach school curriculum subjects. China is also tightening the regulatory net around tech giants such as Tencent.
China's government has intensified its scrutiny of its major private companies, which has triggered a sharp sell-off in Asian stocks this week.
The government has brought in a complete overhaul of its $100 billion private education sector, which will ban profits for companies that teach school curriculum subjects. China is also tightening the regulatory net around tech giants such as Tencent.
The Shanghai Composite Index fell again on Wednesday, shedding 0.58%. But Hong Kong's Hang Seng index rebounded 1.44% after sliding more than 5% in the previous session. In Europe, the continent-wide Stoxx 600 index rose 0.46% after losing ground on Tuesday.
China-linked stocks, particularly in the tech sector, have had a troubling few days. China's CSI 300 index of Shenzhen and Shanghai-listed stocks has fallen around 7.5% over five days, while the Hang Seng has dropped roughly 7%.
The regulatory crackdown has worried global investors, who are reassessing their exposure to China.
"Market sentiment took a sudden dive yesterday in the US, although about half of the damage was undone by later in the session," said Steen Jakobsen, Saxo Bank's chief investment officer.
"Sentiment has softened again overnight on a mixed reaction to US mega-cap earnings reports and on Chinese equities trading lower still after their very rough start to the week."
Apple, Alphabet and Microsoft all reported strong earnings that beat Wall Street estimates after the market close on Tuesday, continuing Big Tech's red-hot performance streak.
Yet Apple shares fell 1.06% in premarket trading over concerns about revenue growth slowing, while Alphabet stock jumped 3.87% after its sales rose.
The other issue occupying investors is the Federal Reserve's latest monetary policy decision, due at 2 p.m. ET. The release will be followed by a press conference with Chairman Jerome Powell.
Analysts will scrutinize the Federal Open Market Committee announcement and Powell's remarks for any sign of when the US central bank might start cutting back support for the economy by "tapering" its $120 billion a week of bond purchases.
The Fed may also highlight certain risks to the economic outlook, including the rise in delta-variant coronavirus cases and the regulatory developments in China.
Bond yields have fallen sharply in recent days as investors have become more nervous about threats to growth, but gained slightly on Wednesday. The yield on the key 10-year US Treasury note - which moves inversely to the price - rose 2.4 basis points to 1.258%.
Elsewhere in markets, oil prices and the dollar ticked up. Bitcoin gained 4% to $39,920, but briefly topped $40,000, as its winning streak continued in the wake of positive comments last week from crypto enthusiasts Elon Musk and Cathie Wood.