Economic News

Stocks Drop as Chinese Unrest Rises, Dollar Advances

Published

on

As mounting dissatisfaction in Chinese Covid restrictions sent a shudder through global markets, shares fell while the currency and Treasury bonds climbed. Chinese stocks took the lead in Asia’s stock market falls, while European futures also showed signs of weakness. US contracts decreased as Black Friday sales at American merchants saw steep discounts and only moderate consumer visitation.

Due to demand for haven assets, the dollar gained ground against currencies like Australia’s and South Korea’s, which are strongly dependent on trade with China. Before cutting its losses, the onshore yuan fell as much as 1%.

Bond prices in Australia and New Zealand rose in tandem with the increase in Treasuries. The cost of default insurance for high-rated dollar bonds issued outside of Japan was in the process of increasing for the first time in five days.

According to Gabriel Wildau, managing director at Teneo Holdings LLC in New York, “markets will react badly to the broad protests and mounting case numbers, which are likely to cause new supply-chain disruptions and reduce consumption demand, at least in the short term.”

Due to the developments in China, which punished risky assets and cast doubt on the future of energy demand, oil fell to its lowest point since December, adding strain to the already unstable global crude market.

The stronger dollar put downward pressure on gold, causing it to ebb slightly.

The depressed mood coming from China contrasts with the uptick in optimism in international markets last week after the Federal Reserve’s meeting minutes from November 1-2 showed that the majority of policymakers supported reducing the rate of interest-rate increases.

Advertisement

Focus on Fed

Since the Fed’s most recent meeting, investors have analyzed a plethora of economic data that has partly allayed fears about inflation, supporting the case for further gradual rate increases.

With a 1.5% weekly increase, the S&P 500 reached its highest point since early September. The Nasdaq 100 also managed to post a weekly gain.

This week’s US jobs data and speeches by central bank leaders like Fed Chair Jerome Powell and New York Fed President John Williams will be the focus of attention.

For the second time this year, the  Chinese central bank reduced the amount of cash that bankers must have in reserve on Friday amid the country’s difficulties, providing more help for a struggling economy that is being bogged down by Covid controls.

A market strategist at Saxo Capital Markets in Sydney, Jessica Amir, asserted that “Anything exposed to China is probably going to be vulnerable.” Investors will likely show their doubt about the future earnings of Chinese exposed corporations by selling.

This week’s major events:

John Williams of the Fed speaks on Monday

Advertisement

James Bullard’s MarketWatch interview with the Fed on Monday

Christine Lagarde of the ECB speaks to a committee of the European Parliament on Monday

Tuesday’s economic and consumer confidence indicators for the euro area

Tuesday’s US Conference Board consumer confidence

Wednesday’s EIA crude oil inventory report

PMI for China, Wednesday

Fed Chair Jerome Powell’s remarks, and Michelle Bowman of the Fed Talk by Lisa Cook on Wednesday

Fed’s Beige Book is released on Wednesday.

Advertisement

Wednesday: US wholesale inventories; GDP

PMIs from S&P Global, Thursday

US consumer spending, initial claims for unemployment, and ISM Manufacturing on Thursday

Michael Barr, Lorie Logan, and Michelle Bowman from the Fed talk on Thursday

Haruhiko Kuroda, a BOJ, speaks on Thursday

nonfarm payrolls, US unemployment, and Friday

Charles Evans of the Fed speaks on Friday

Christine Lagarde of the ECB speaks on Friday

Advertisement

Several significant market changes include:

Stocks

As of 3:09 PM Tokyo time, S&P 500 futures were down 0.7%.

Nasdaq 100 futures decreased by 0.9%.

Euro Stoxx 50 futures decreased by 0.6%.

Topix Index decreased by 0.7%.

S&P ASX Index decreased by 0.4%.

The Hang Seng Index decreased by 2.1%.

Advertisement

Shanghai Composite Index decreased by 1.4%.

Currencies

By 0.3%, the Bloomberg Dollar Spot Index increased.

To $1.0357, the euro declined by 0.4%.

Japanese yen increased by 0.7% to 138.22 yen per dollar.

To $7.2273 per dollar, the offshore yuan decreased by 0.5%.

To $0.6677, the Australian dollar dropped 1.1%.

Cryptocurrencies

Advertisement

BTC dropped by 2.5% to $16,152.68.

To $1,167.61, ether dropped 3.9%.

Bonds

Ten-year Treasury yield fell four basis points to 3.64%.

The 10-year yield in Australia dropped by six basis points to 3.52%.

Commodities

To reach $74.05 a barrel, West Texas Intermediate crude lost 2.9%.

To $1,750.18 per ounce, spot gold decreased by 0.3%.

Advertisement

Read More Economic News Here

 

You must be logged in to post a comment Login

Leave a Reply

Cancel reply

Trending

Exit mobile version