S&p 500, Hang Seng Weekly Open: Alibaba Probe Weighs On Sentiment

Asia-Pacific markets may kick off the week with a positive tone as President Trump hinted at “good news” on the stimulus bill after refusing to sign off last week. Major US equity futures are drifting higher at the open amid a relatively quiet week for trading due to lower liquidity and the holiday break. Australian and New Zealand stock markets are shut on Monday and will resume trading on Tuesday. Major global markets will be closed on Friday (New Year’s Day).

China’s State Administration for Market Regulation started an antitrust probe into Alibaba Group on alleged monopoly behavior on December 24th, causing Alibaba’s share price to tumble 8.13% in Hong Kong. Other major Chinese tech companies suffered a heavy selloff on the same day as sentiment soured. JD healthcare (-15.64%), Tencent (-2.63%), JD.Com (-2.28%) and Meituan (-2.72%) were among the worst performers, whereas financial stocks were doing the heavy lifting (chart below).

Alibaba Group is China’s leading e-commerce giant and also the parent company of Ant Financial, which halted its mega IPO in early November due to regulatory concerns. A tightening regulatory environment may bring headwinds for Alibaba in the near term, and may affect broader sentiment in Chinese tech firms listed both in Hong Kong and New York. Alibaba Group is cooperating with the investigation team and the process was reported as smooth and orderly over the weekend.

Top 10 Hang Seng Index Components Daily Performance - Dec. 24, 2020

S&P 500, Hang Seng Weekly Open: Alibaba Probe Weighs on Sentiment

Source: Bloomberg, DailyFX

Prime Minister Boris Johnson has admitted that the Brexit deal “perhaps does not go as far as we would like” over access to EU markets for financial services. The British Pound paused a three-day rally and traded lower on Monday’s open. A potential conclusion of the Brexit trade deal is among the top market events to watch out for this week.

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