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Stocks Fall Amid China Unrest, Dollar Advances: Markets Wrap

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(Bloomberg) — Shares were under downward pressure and the dollar climbed as markets opened in Asia on Monday to news of growing unrest in China over Covid restrictions.

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US stock futures and Australian equities fell. The greenback made some of its biggest early gains against the currencies of Australia and South Africa, both of which are exposed to trade with China.

The offshore yuan dropped. Stock futures for Hong Kong already pointed toward declines even before protests in China worsened over the weekend. A gauge of US-listed Chinese shares fell on Friday.

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“The near-term clarity suggests we might see some derisking around Chinese markets,” said Chris Weston, head of research at Pepperstone Group Ltd. “We are seeing some outflows of the offshore yuan, which I think is a pretty good indication of how Chinese markets may fare,” he said, while adding that the outlook for China over the longer term remains relatively robust.

Oil was little changed after suffering a third weekly loss. Gold was also steady.

Treasuries may find support on bids for safe assets, though moves could be complicated by Thursday’s holiday in the US, followed by shortened trading on Friday. Yields on the benchmark 10-year maturity edged down to 3.68% Friday.

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Yields on Australian and New Zealand government bonds edged higher.

The downbeat mood emanating from China contrasts with the boost to sentiment in global markets last week after the Federal Reserve’s Nov. 1-2 meeting minutes showed most officials backing slowing the pace of interest-rate hikes.

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Since the Fed’s latest meeting, investors have parsed a bevy of economic data that somewhat eased inflation concerns, further strengthening the case for smaller rate hikes.

The S&P 500 notched a weekly gain of 1.5% that took the index to the highest level since early September. The Nasdaq 100 also eked out a gain for the week.

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All eyes will be on the US jobs report this week and on Fed Chair Jerome Powell and New York Fed President John Williams, who are among central bank officials scheduled to speak.

Amid the challenges in China, the nation’s central bank on Friday cut the amount of cash lenders must hold in reserve for the second time this year, an escalation of support for an economy that’s being weighed down by Covid curbs.

Key events this week:

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  • Fed’s John Williams speaks, Monday

  • Fed’s James Bullard MarketWatch interview, Monday

  • ECB’s Christine Lagarde addresses European Parliament committee, Monday

  • Euro area economic confidence, consumer confidence, Tuesday

  • US Conference Board consumer confidence, Tuesday

  • EIA crude oil inventory report, Wednesday

  • China PMI, Wednesday

  • Fed Chair Jerome Powell speech, Fed’s Michelle Bowman Lisa Cook speak, Wednesday

  • Fed releases its Beige Book, Wednesday

  • US wholesale inventories, GDP, Wednesday

  • S&P Global PMIs, Thursday

  • US construction spending, consumer income, initial jobless claims, ISM Manufacturing, Thursday

  • Fed’s Lorie Logan, Michelle Bowman, Michael Barr speak, Thursday

  • BOJ’s Haruhiko Kuroda speaks, Thursday

  • US unemployment, nonfarm payrolls, Friday

  • Fed’s Charles Evans speaks, Friday

  • ECB’s Christine Lagarde speaks, Friday

Some of the main moves in markets:

Stocks

  • S&P 500 futures fell 0.3% as of 8:10 a.m. Tokyo time.

  • Nasdaq 100 futures fell 0.4%

  • Nikkei 225 futures rose 0.2%

  • Australia’s S&P/ASX 200 Index fell 0.3%

  • Hang Seng Index futures fell 0.5%

Currencies

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  • The euro fell 0.2% to $1.0377

  • The Japanese yen fell 0.1% to 139.33 per dollar

  • The offshore yuan fell 0.6% to 7.2369 per dollar

  • The Australian dollar fell 0.4% to $0.6721

Cryptocurrencies

  • Bitcoin fell 0.5% to $16,483.62

  • Ether fell 0.8% to $1,205.49

Bonds

Commodities

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This story was produced with the assistance of Bloomberg Automation.

–With assistance from Georgina Mckay.

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©2022 Bloomberg L.P.

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