Stocks Down in China on Covid Worries; Dollar rises: Market wraps

(Bloomberg) — Stocks fell amid concerns that China could tighten the Covid curve after several deaths were reported, and investors sought refuge in the dollar.

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The S&P 500 and Nasdaq 100 contracts were both down at least 0.5%. Walt Disney Co defied gloom, rallying in New York premarket trading after the company brought back former leader Bob Iger as chief executive officer in a surprise move. European equities edged lower.

The dollar rose against its Group-of-10 counterparts and emerging market currencies. Treasuries were steady after giving back previous gains. Oil sank on the concern of the weakening demand outlook from China.

China saw its first Covid-related death in nearly six months on Saturday and two more were reported on Sunday. A severe outbreak across the nation has raised concerns that authorities may once again resort to harsher restrictions. A city near Beijing that is said to be a test case for ending virus restrictions has suspended schools, locked down universities and asked residents to stay at home for five days.

“Financial markets have cooled amid concerns that Covid-19 cases in China and new restrictions will shake up production output and push demand for raw materials,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. .

In the outlook for stocks, Goldman Sachs Group strategists said that investors hoping for a better year in 2023 will be disappointed, and the phase of the bear market has not yet ended.

“The conditions normally consistent with an equity trough have not been reached,” strategists including Peter Oppenheimer and Sharon Bell wrote in a note Monday. They say a peak in interest rates and lower valuations that reflect a recession are needed before a sustained stock market recovery can occur.

Traders this week will also look to the minutes of the latest Federal Reserve policy meeting for more clues on the course of a rate hike.

Atlanta Fed President Raphael Bostic said he would prefer to slow the pace of interest rate increases, with no more than 1 percentage point hikes, to ensure the economy has a soft landing. Boston Fed President Susan Collins reiterated that options are open for a December rate hike, including a possible 75-basis-point move.

Elsewhere, Hong Kong stocks led lower in Asia as investors weighed whether the recent rally in China’s reopening was overdone. Cryptocurrency prices struggle in the ongoing crisis sparked by the downfall of the once powerful Sam Bankman-Fried FTX empire. Crypto-exposed stocks fell.

This week’s highlights:

  • US Chicago Fed national activity index, Monday

  • US Richmond Fed manufacturing index, Tuesday

  • The OECD released its Economic Outlook on Tuesday

  • Fed’s Loretta Mester and James Bullard spoke, Tuesday

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

  • US MBA mortgage applications, durable goods, early jobless claims, University of Michigan sentiment, new home sales, Wednesday

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

  • The ECB publishes an account of its October policy meeting, Thursday

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

  • US stock and bond markets closed early on Friday

Some of the main movements in the market:

stock

  • Futures on the S&P 500 fell 0.5% at 6:02 am New York time

  • Futures on the Nasdaq 100 fell 0.7%

  • Futures on the Dow Jones Industrial Average fell 0.2%

  • Stoxx Europe 600 down 0.1%

  • MSCI World Index down 0.5%

Currency

  • Bloomberg Spot Dollar 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 $1,128.49

bonds

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

  • German 10-year yields little changed at 2.02%

  • British 10-year yields little changed at 3.24%

commodity

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

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

This story was produced with the help of Bloomberg Automation.

–With help from Sagarika Jaisinghani and Tassia Sipahutar.

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