China, Euro Data Cheer, Bitcoin Goes Legal and Disney – What’s Moving Markets


© Reuters.

By Geoffrey Smith — Economic data from China and Europe keep the global recovery on track. Bitcoin becomes legal tender in El Salvador. Disney blows away a 13-year old record for a Labor Day weekend debut at the box office, and oil falls despite a slow return to normal in the Gulf of Mexico. Here’s what you need to know in financial markets on Tuesday, 7th September.

1. Chinese trade booms, Europe GDP upgraded

Economic data in China and Europe gave reassurances that the recovery is still largely on track despite the wave of Delta-variant Covid-19 that has snarled supply chains and complicated the summer tourist season. 

Chinese imports grew by 33% on the year in August, while exports grew by 25.6%, both numbers coming in comfortably expectations. The numbers included record value amounts of iron ore imports, although that wasn’t enough to stop iron ore futures falling to a 14-month low on expectations of further output curbs on steelmakers.

Eurozone GDP for the second quarter was meanwhile revised up to show growth of 2.2% on the quarter and 14.3% on the year, largely due to stronger consumption.

The pandemic nonetheless left its mark in Australia, where the central bank said it will take more time to phase out its asset purchases, even though it tapered its rate of bond-buying as planned

2. Bitcoin’s legal milestone

Bitcoin (BitfinexUSD) briefly rose above $52,000 on a wave of positive sentiment as the cryptocurrency formally became legal tender in El Salvador. The Latin American country is the first in the world to take this step, which it hopes will facilitate the flow of remittances from expatriate workers back to the local economy.

Hopes that this could spark a trend still seem ambitious, however. Even El Salvador has said that Bitcoin can’t be used to pay taxes, an eloquent statement as to what the government thinks of its real underlying value.  

That, plus the fact that the news had been well flagged, meant that the rally soon reversed. Other coins also reversed under pressure from the selling in Bitcoin.

3. Stocks set to open flat; 737 MAX disappointment, Match Group eyed

U.S. stock markets are set to reopen after the long weekend flat, against a backdrop of constant rumblings about supply chain disruptions and high Covid-19 case rates.  New infections hit their highest since the January peak last week, although there are signs of the infection curve flattening. Deaths meanwhile hit their highest level since March.

By 6:15 AM ET (1015 GMT), Dow Jones futures were up 8 points, less than 0.1%, while S&P 500 futures and Nasdaq 100 futures, which closed on Friday near record highs, were both down by less than 0.1%.

Stocks likely to be in focus later include Boeing (NYSE:BA), after one of its biggest customers – European budget carrier Ryanair – walked away from negotiations for a big order for 737 MAX 10 aircraft, citing differences over price. Match Group (NASDAQ:MTCH) may also be in focus after the dating-site operator was included in the S&P 500 index.

4. Disney shatters box office record with Shang Chi

Disney’s Asian-led superhero movie “Shang-Chi” made $90 million on its debut weekend in North American cinemas, a boost to an entertainment sector still haunted by the risks of Covid-19 and lockdowns.

That’s three times the 13-year old record for a Labor Day weekend debut, previously held by “Halloween”.

The release was given exclusively to movie theatres, rather than being simultaneously released on the Disney+ streaming channel. Disney is being sued by actor Scarlett Johansson over the hybrid release of “Black Widow” earlier in the summer, as it eroded her contractual cut from box office revenues.

AMC Entertainment (NYSE:AMC) stock, which has often veered wildly in response to no news at all, rose 0.7% on one of the clearest signs in months that movie theatres can still draw crowds.

5. Oil falters despite extended shut-ins in Gulf of Mexico

Crude oil prices fell again as China’s trade data indicated that imports of crude were still running at more than 1 million barrels a day below February levels in August, despite rising 8% from July. Over the weekend, Saudi Arabia had announced a sharp cut in official selling prices to Asian buyers for October, a sign that it sees the regional market softening as winter starts.

By 6:30 AM ET, U.S. futures were down 1.0% at $68.58 a barrel, while Brent futures were down 0.2% at $72.08 a barrel.

The weak tone is at odds with what appears to be a slow restoration of output at production platforms in the Gulf of Mexico after Hurricane Ida. Government data on Monday showed that some 1.53 million barrels a day of crude output is still shut in, equivalent to 83% of Gulf output.

China, Euro Data Cheer, Bitcoin Goes Legal and Disney – What’s Moving Markets


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