Stocks Drop on China Covid Worries; Dollar Rises: Markets Wrap

Date:

(Bloomberg) — Stocks fell on concerns that China could tighten Covid restrictions following a string of reported deaths, with investors seeking refuge in the dollar.

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S&P 500 and Nasdaq 100 contracts both fell at least 0.5%. walt disney co. braved the gloom and rebounded in New York premarket trading after the company brought back former leader Bob Iger as CEO in a surprise move. European equities were lower.

The dollar appreciated against its Group of 10 counterparts and emerging market currencies. Treasuries were stable after returning previous gains. Oil slumped on concerns about declining demand prospects from China.

China saw its first Covid-related death in nearly six months on Saturday and two more were reported on Sunday. Worsening outbreaks across the country are fueling concerns that authorities may once again resort to harsh restrictions. A city near Beijing, rumored to be a test case for ending virus restrictions, has suspended schools, closed universities and asked residents to stay at home for five days.

“Financial markets have caught a cold on concerns that rising Covid cases in China and another tightening of restrictions will send a new shiver through manufacturing output and depress demand for commodities,” said Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown. .

On the outlook for equities, Goldman Sachs Group Inc. strategists said. that investors hoping for a better year in 2023 would be disappointed as the bear market phase is not yet over.

“The conditions typically consistent with a stock trough have not yet been reached,” strategists including Peter Oppenheimer and Sharon Bell wrote in a note Monday. They said a spike in interest rates and lower valuations brought on by the recession are necessary for stock markets to recover sustainably.

Traders will also be looking to the minutes of the Federal Reserve’s most recent policy meeting this week for more clues about the course of interest rate hikes.

Raphael Bostic, president of the Atlanta Fed, said he favors slowing the pace of rate hikes, with no more than 1 percentage point more hikes, to try to give the economy a soft landing. Boston Fed President Susan Collins reiterated her view that options are open for the size of the December rate hike, including the possibility of a 75 basis point step.

Elsewhere, Hong Kong equities led to declines in Asia as investors weighed whether the recent rally over a China reopening was overdone. Cryptocurrency prices struggled in the ongoing crisis sparked by the demise of Sam Bankman-Fried’s once mighty FTX empire. Stocks exposed to crypto fell.

Main events this week:

  • US Chicago Fed National Activity Index, Monday

  • US Richmond Fed Manufacturing Index, Tuesday

  • The OECD publishes Economic Outlook on Tuesday

  • Fed’s Loretta Mester and James Bullard speak Tuesday

  • S&P Global PMIs: US, Euro Area, UK, Wednesday

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

  • Minutes from the Federal Reserve meeting on November 1 and 2, Wednesday

  • The ECB will publish the report of its policy meeting in October on Thursday

  • The US stock and bond markets are closed for Thanksgiving, Thursday

  • US stock and bond markets close early Friday

Some of the major moves in markets:

Shares

  • Futures on the S&P 500 are down 0.5% as of 6:02 a.m. New York time

  • Futures on the Nasdaq 100 fell 0.7%

  • Futures on the Dow Jones Industrial Average fell 0.2%

  • The Stoxx Europe 600 fell 0.1%

  • The MSCI World index fell 0.5%

Currencies

  • The Bloomberg Dollar Spot Index rose 0.7%

  • The euro fell 0.8% to $1.0239

  • The British pound fell 0.6% to $1.1821

  • The Japanese yen fell 0.9% to 141.70 per dollar

Cryptocurrencies

  • Bitcoin fell 0.9% to $16,110.71

  • Ether fell 1.1% to USD 1,128.49

Bonds

  • The yield on 10-year government bonds was little changed at 3.83%

  • The German 10-year yield was little changed at 2.02%

  • The UK 10-year yield was little changed at 3.24%

Raw materials

  • West Texas Intermediate crude fell 0.5% to $79.70 a barrel

  • Gold futures fell 0.6% to $1,757.70 an ounce

This story was created with the help of Bloomberg Automation.

–With help from Sagarika Jaisinghani and Tassia Sipahutar.

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©2022 Bloomberg LP

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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