Stocks fall on China Covid concerns; Dollar Rise: Market Recap

(Bloomberg) – Stocks fell amid fears China would tighten Covid restrictions after a string of reported deaths as investors sought refuge in the dollar.

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European equities fell slightly, with mining stocks being the main drag on the regional benchmark. S&P 500 and Nasdaq 100 futures both fell about 0.5%. Walt Disney Co. rose more than 10% in premarket trading in New York after the company brought back former executive Bob Iger as chief executive.

The dollar appreciated against its Group of 10 peers and emerging market currencies. Treasuries returned their earlier gains. Oil sank on fears of a weakening demand outlook from China.

China experienced its first Covid-related death in nearly six months on Saturday and two more were reported on Sunday. Worsening outbreaks across the country are raising fears authorities may 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 home for five days.

“Financial markets have taken a chill amid concerns that rising Covid cases in China and further tightening of restrictions will send a fresh chill to manufacturing output and depress demand for commodities,” said Susannah Streeter. , Principal Investment and Market Analyst at Hargreaves Lansdown. .

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

“The conditions that are generally consistent with an equity bottom have not yet been reached,” strategists including Peter Oppenheimer and Sharon Bell wrote in a note on Monday. They said a spike in interest rates and lower valuations reflecting the recession are needed before a sustained stock market rally can occur.

The story continues

This week, traders will also look to the minutes from the Federal Reserve’s latest policy meeting for more clues on the course of rate hikes.

Atlanta Fed President Raphael Bostic said he favors a slower pace of interest rate hikes, with no more than a full percentage point of additional hikes, to try to secure a soft landing of the economy. Boston Fed President Susan Collins reiterated her view that options are open for the size of December’s interest rate hike, including the possibility of a 75 bp move. base.

Elsewhere, Hong Kong stocks led declines in Asia as investors wondered if the recent rally on a reopening of China was overdone. Cryptocurrency prices have struggled in the current crisis triggered by the downfall of Sam Bankman-Fried’s once mighty FTX empire.

Key events this week:

• Chicago Fed National Activity Index in the United States, Monday

• Richmond Fed U.S. Manufacturing Index, Tuesday

• The OECD publishes its Economic Outlook on Tuesday

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

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

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

• Minutes of the Federal Reserve’s Nov. 1-2 meeting, Wednesday

• The ECB publishes the minutes of its October policy meeting on Thursday

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

• U.S. stock and bond markets close early on Friday

Some of the major movements in the markets:

Shares

• The Stoxx Europe 600 fell 0.1% at 9:22 am London time

• S&P 500 futures fell 0.5%

• Nasdaq 100 futures fell 0.6%

• Dow Jones Industrial Average futures fell 0.3%

• The MSCI Asia-Pacific index fell 1.2%

• The 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% to 141.46 per dollar

• The offshore yuan fell 0.6% to 7.1682 per dollar

• The British pound fell 0.7% to $1.1806

Cryptocurrencies

• Bitcoin fell 1.3% to $16,037.5

• Ether fell 1.9% to $1,120.26

Obligations

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

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

• The UK 10-year yield rose four basis points to 3.27%

Goods

• Brent fell 0.6% to $87.09 a barrel

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

This story was produced with assistance from Bloomberg Automation.

–With help from Ruth Carson, Sagarika Jaisinghani and Tassia Sipahutar.

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