Stocks slide on China's Covid concerns;  Dollar Rises: Markets Overview

(Bloomberg) — Stocks fell on concerns that China may tighten Covid restrictions after a spate of reported deaths, with investors seeking shelter in the dollar.

Most Read by Bloomberg

European shares were lower, with mining stocks the biggest drag on the regional benchmark index. S&P 500 and Nasdaq 100 futures were down about 0.5%. The Walt Disney Co. rose more than 10 percent in premarket trading in New York after the company brought back former leader Bob Iger as CEO.

The dollar rose against its G10 peers and emerging market currencies. Government bonds gave back previous gains. Oil sank on concerns of a weakening outlook for demand from China.

China recorded its first Covid-related death in almost six months on Saturday, and two more were reported on Sunday. Worsening outbreaks across the country have raised fears that authorities may once again resort to strict restrictions. A city near Beijing that was rumored to be a test case for lifting virus restrictions has suspended schools, locked down universities and asked residents to stay at home for five days.

“Financial markets took a chill amid concerns that rising Covid cases in China and new tightening of restrictions will trigger further jitters in manufacturing output and reduce demand for raw materials,” said Susanna Streeter, senior investment and market analyst at Hargreaves Lansdown.

As for the outlook for the stock, strategists at Goldman Sachs Group Inc. said investors hoping for a better year in 2023 will be disappointed as the bear market phase is not yet over.

“Conditions typically consistent with equity bottoms have not yet been reached,” strategists including Peter Oppenheimer and Sharon Bell wrote in a note on Monday. They said a peak in interest rates and lower valuations reflecting the recession were needed before a sustained stock market recovery could occur.

Traders this week will also look to minutes from the Federal Reserve’s latest policy meeting for more clues on the path of rate hikes.

Atlanta Federal Reserve President Rafael Bostick said he supports slowing the pace of interest rate hikes, with no more than 1 percentage point more hikes to try to ensure a soft landing for the economy. Boston Federal Reserve President Susan Collins reiterated her view that options are open for the size of a December interest rate hike, including the possibility of a 75 basis point move.

Elsewhere, shares in Hong Kong led declines in Asia as investors weighed whether the recent surge in China’s reopening was overblown. Cryptocurrency prices have struggled in the ongoing crisis brought on by the fall of Sam Bankman-Fried’s once-mighty FTX empire.

Key events this week:

  • US Federal Reserve National Activity Index in Chicago, Monday

  • US Richmond Federal Reserve manufacturing index, Tuesday

  • OECD publishes economic forecasts, Tuesday

  • The Fed’s Loretta Mester and James Bullard speak on Tuesday

  • S&P Global PMI: US, Eurozone, UK, Wednesday

  • US MBA Mortgage Applications, Durable Goods, Initial Jobless Claims, University of Michigan Sentiment, New Home Sales, Wednesday

  • Minutes of the Federal Reserve meeting on November 1-2, Wednesday

  • The ECB published a report on its October policy meeting Thursday

  • U.S. stock and bond markets are closed for the Thanksgiving holiday Thursday

  • US stock and bond markets close early on Friday

Some of the main movements in the markets:

Stock up

  • The Stoxx Europe 600 was down 0.1 percent as of 9:22 a.m. London time

  • S&P 500 futures fell 0.5%

  • Nasdaq 100 futures fell 0.6%

  • Dow Jones Industrial Average futures fell 0.3%

  • MSCI Asia Pacific Index fell 1.2%

  • MSCI Emerging Markets index fell 1.3%

Currencies

  • The Bloomberg Dollar Spot index rose 0.6%

  • The euro fell 0.8% to $1.0243

  • The Japanese yen fell 0.8 percent to 141.46 per dollar

  • The offshore yuan fell 0.6 percent to 7.1682 per dollar

  • The British pound fell 0.7% to $1.1806

Cryptocurrencies

  • Bitcoin fell 1.3% to $16,037.50

  • Ether fell 1.9% to $1,120.26

Bonds

  • The 10-year Treasury yield rose one basis point to 3.84%

  • Germany’s 10-year bond yield rose four basis points to 2.06%

  • Britain’s 10-year bond yield advanced four basis points to 3.27%

Goods

  • Brent crude fell 0.6% to $87.09 a barrel

  • Spot gold fell 0.6% to $1,740.06 an ounce

This story was created using Bloomberg Automation.

–With assistance from Ruth Carson, Sagarika Jaisinghani and Tasia Sipahutar.

Most Read by Bloomberg Businessweek

©2022 Bloomberg LP

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *