China regulatory crackdown continues

Last Thursday 28^th, the U.S. central bank announced that it was leaving rates unchanged and promised to continue supporting American economy. The securities purchase program also remains unchanged. During his press conference, the Head of the Federal Reserve Mr. Powell said he was confident in the recovery despite of the Covid comeback. Mr. Powell thinks that the road to full employment is still long. He gave an idea of a reduction in the securities purchase program at the end of the year or even in early 2022.

China’s securities regulator gathered executives of major investment banks on Wednesday night, attempting to ease market fears about Beijing’s crackdown on the private education industry. Message is that the education policies were targeted and not intended to hurt companies in other industries. Moreover, Beijing will continue to allow firms to go public in the U.S.

At the same time In Asia, stock markets were falling yesterday. The Chinese giants of the Internet and gaming are badly treated, after criticism of a state-owned newspaper against the addiction to video games. This sector, particularly prosperous in China, is increasingly criticized for the addiction of young people to screens and vision problems that this causes. Tencent and its competitor NetEase lost more than 6%, showing investors’ concerns about possible government restrictions and crackdown.

Amazon closed down 7.5% last Friday after the company on Thursday reported disappointing second-quarter results and gave weak guidance for the current quarter. As economy continues to reopen and people start spending money on travel and other services with shopping coming back to stores, there is an expectation of further slower growth of e-commerce.

In a generally calm market, the CHF succeeded to do well. The inaction of the major central banks in the face of rising prices is supporting our currency. The Swiss franc reached its strongest level against the euro this year. The currency gained to 1.0729 per euro, the strongest level since November. Today EUR/CHF at 1.0729 and the USD/CHF at 0.9038.

The Swiss consumer price index fell by 0.1% in July compared to June mainly due to the summer sales. On a yearly basis, the Federal Statistical Office calculated a 0.7% increase in prices.

Swiss PMI reached a record high. Strong new orders boosted the purchasing managers’ index for the industrial sector to 71.1 points in July, a record high since its inception in 1995.

The SMI index is also high at 12’163 now.

The S&P 500 advanced 0.8% on Tuesday and closed at a record high. The Dow Jones Industrial Average (+0.8%) rose as well, followed by gains in the Nasdaq Composite (+0.6%) and Russell 2000 (+0.4%). Ten of the 11 S&P 500 sectors closed higher. The energy (+1.8%), industrials (+1.4%), health care (+1.4%), and financials (+1.1%) sectors outperformed, while the communication services sector (-0.2%) lagged.

Oil prices went lower following possible growing tensions between US and Iran. Crude now at 70.40 and Brent at 72.40.

On the bond market, the good results of companies published last and this week did not erase the pressure on government yields. At the 10-year Treasury note ended the day at 1.18%.