European Shares Seen Lower Amid China Tech Crackdown
European stocks are set to open sharply lower on Monday after China ordered Tencent to end exclusive music licensing deals with record labels around the world, a step aimed at tackling the company’s dominance of online music streaming in the country.
Beijing’s announcement of new rules barring for-profit tutoring in core school subjects to ease financial pressures on families also dented sentiment.
The policy change also restricts foreign investment in the sector through mergers and acquisitions, franchises, or variable interest entity (VIEs) arrangements.
U.S.-China tensions also remain on investors’ radar after China lashed out at U.S. policies in a tense start to high-level talks in Tianjin.
Asian markets were mostly lower, with benchmark indexes in China and Hong Kong losing 2-3 percent as shares in Chinese private education companies succumbed to heavy selling pressure.
Japan’s Nikkei index bucked the weak trend to rise more than 1 percent as traders returned to their desks after a two-day holiday.
The dollar index eased slightly and the yield on 10-year Treasuries dipped as investors looked ahead to the Federal Open Market Committee (FOMC) meeting this week for clues on the timing of stimulus tapering.
China’s yuan hovered near one-week low against the dollar as investors await the outcome of a key political meeting in Beijing later this week.
Oil prices fell in Asian trade as rising COVID-19 cases in parts of Asia and floods in China raised concerns about the recovery of fuel demand. Bitcoin jumped toward $40,000 to extend recent gains.
Business confidence data from Germany is due later in the day, headlining a light day for the European economic news.
Across the Atlantic, key U.S. economic data due this week include reports on new home sales, durable goods orders, consumer confidence, second quarter GDP and personal income and spending.
On the earnings front, Tesla, General Electric, Alphabet, Apple, Microsoft, Boeing, McDonald’s, Pfizer, Amazon, and Exxon Mobil are among a slew of companies due to report their quarterly results.
U.S. stocks finished at record highs on Friday after tech giants Snap and Twitter delivered better-than-expected earnings. The Dow climbed 0.7 percent, while the-heavy Nasdaq Composite and the S&P 500 both rallied about 1 percent.
European stocks advanced on Friday as investors reacted to upbeat earnings updates, encouraging economic data and dovish comments from the European Central Bank.
The pan European Stoxx 600 jumped 1.1 percent. The German DAX rose about 1 percent, France’s CAC 40 index gained 1.4 percent and the U.K.’s FTSE 100 added 0.9 percent.
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