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Brief: Dow Jones, Nikkei 225 Rally Fades as China Stocks Set New Record


  • US futures are relatively unchanged today ahead of earnings.
  • In China, market value of all publicly traded companies reached an all-time high.
  • In Europe, the DAX index and FTSE 100 are little changed.

American futures are little changed today as investors reacted to US corporate earnings that started yesterday. Dow Jones, S&P 500, and Nasdaq 100 index are barely moved, a day after they dropped by 0.55%, 0.65%, and 0.10%, respectively.

Dow Jones pauses ahead of more bank earnings

The earning season started yesterday after JP Morgan, the biggest bank in the US by assets, released its earnings that beat what analysts were expecting. The bank said that its third-quarter earnings rose by 4% from the same period a year ago.

The bank made a profit of $9.44 billion, which was higher than the $9.40 billion that analysts were expecting. Similarly, Citigroup and Blackrock released better-than-expected third quarter earnings. The better results were partially because the companies set aside less funds to bad credit.

However, the CEOs warned that the continued growth depended on whether the government will supercharge the economy by adding another stimulus. Later today, the Dow Jones and other US indices will react to earnings from banks like PNC Financial, Goldman Sachs, and Morgan Stanley.

Global equities are also reacting to the evasive Covid-19 vaccine and antigen. Yesterday, Johnson & Johnson paused its trials after a patient fell ill. Later on, Eli Lilly, a giant American pharmaceutical company, also paused its antigen on safety concerns. While the two firms have reiterated that they will continue working on their drugs, the developments irked investors.

Nikkei 225 pauses as China’s equities hit record

Meanwhile, in Asia, the Nikkei 225 index is barely moved after Japan released weak industrial production and capacity utilisation data. The biggest news, nonetheless, was from China, where the rally of equities pushed the market cap of all firms in the country to more than $10.08 trillion. That was higher than the previous record of $10.05 trillion that was reached in 2015. Investors are optimistic about China’s recovery, especially after the recent strong numbers.

Elsewhere, in Europe the performance of equities is relatively mixed. Futures tied to the DAX index and FTSE 100 are up by 0.20% and 0.50% while those tied to the CAC 40 are down by 0.05%.

Dow Jones futures technical outlook

The four-hour chart shows that Dow Jones futures formed a doji pattern in overnight trading after it reached a low of $28,610. Since then, the index has moved up slightly and is trading at $28,745. The price remains above the 50-day and 25-day exponential moving averages. It is also above the ascending trendline that is shown in green.

Therefore, I suspect that the Dow will continue rising as bulls attempt to test the previous high of $28,968. On the flip side, a move below $28,610 will invalidate this trend.

Dow Jones index technical chart

Dow Jones