American markets today, Monday, viewed several hours before the 9:30 a.m. EST opening, appear poised to start strongly negative as the markets – and the world – attempt to understand the stunning fall of Afghanistan and its potential impact on regional economies, the overwhelming impact on the Biden administration’s foreign policy priorities, China issues, regional stability, oil supplies, whether the Taliban triumph points to a resurgence of global terrorism and even by extension American hegemony in world affairs.
Canadian markets are also poised for a negative open with the TSX 60 showing a drop of 0.41% at time of writing.
European markets are open at time of writing and all indices there are in the red.
Amongst precious metals, the safe havens of gold and silver are down.
Amongst currencies the British pound sterling, Euro and the Canadian dollar are all down against the American market, a situation due at least in part to the Afghanistan turmoil. “Haven currencies (such as the American dollar) are catching a bid this morning as investors process the two main news stories of the weekend: global Delta variant cases rising and the fall of Kabul to the Taliban,” says Jeremy Thomson-Cook, Chief Economist at London-based payments firm Equals Money. “It’s too early to say just what kind of reaction markets will have to the wider re-emergence of Taliban power in Afghanistan and what it means for the US-led coalition that spent so many years there,” he says.
“For now, however it is unlikely to lead to an outpouring of optimism,” he says in a masterpiece of Monday morning understatement.
Greenback watchers will be checking minutes of the Federal Reserve Bank meeting on Wednesday. looking for clues about tapering, Thomson-Cook says.
In previous editions of this column, I have suggested investment sectors and trends that merit at least some consideration in investment portfolios and have differentiated between companies that benefitted or suffered from the pandemic and stand to benefit -- or not – from the recovery.
Now, the Delta variant has a potential impact on some quarterly results.
The United States will not lock down again, but "things are going to get worse" as the variant case numbers surge, predicted Dr. Anthony Fauci, Director of the National Institute of Allery and Infectious Diseases said yesterday on ABC’s This Week.
Walmart reports second quarter results tomorrow and to date has enjoyed strong sales due first to the impact of consumers stockpiling to prepare for lockdowns and more recently for back-to-school gear. Investors and analysts will listen for any projections on the impact of the Delta variant. Also on Tuesday, Home Depot Inc. reports secondar quarter results, likely to reflect demand from home builders, renovators and do-it-yourself home handypersons. The company can expect another boost from the handyperson category if the variant leads to a return of restrictions.
Lowe’s Cos. Inc. reports second quarter results on Wednesday and could show a dip in sales, relative to the spike induced by the pandemic. Investors and analysts will be listening to company commentary about the potential impact of the Delta variant.
Macy’s Inc. reports second-quarter results on Thursday, likely to reflect a surge in sales with returning customers. However, as with Lowe’s, investors and analysts will be listening for the potential impact of the Delta variant.
Estee Lauder releases fourth quarter and full year results, likely to show a significant increase in sales following the easing of pandemic restrictions. At the same time, investors and analysts will be listening for commentary on the impact or potential impact of the Delta variant and even the Christmas sales outlook.
Disclosure: I do not own any shares in any company mentioned in this column.
Al Emid is a financial journalist broadcaster and author. His next book. The 2022 Emid Report on Volatility provides a map for navigating market tumult and is scheduled for release in January 2022.