| By Jeffrey Smith, Investing.com |
The largest anti-government protests in 30 years gripped China at the weekend, calling for an end to the draconian measures against the corona epidemic in the country. However, there was no sign of a move by the authorities on Monday in the country’s official media. In response, the price of oil has reached its lowest level in nearly a year, and luxury and mining stocks are also faltering.
Speeches by senior Fed officials may temper reactions to signs of a weak Thanksgiving weekend for retail sales, while European Central Bank (ECB) President Christine Lagarde grapples with an increasingly apparent split among her subordinates at the ECB. Bahamas opposes her efforts of the USA to carry out the bankruptcy procedure of the FTX exchange.
Here’s what you’ll need to know in the financial markets on Monday, November 28.
1. The demonstrations surrounding the corona epidemic in China
China was rocked over the weekend by the biggest anti-government protests since 1989, as citizens flocked to major cities across the country to demonstrate against the country’s ongoing coronavirus lockdowns.
The protests brought to a new high a week of rising public anger, exemplified by the violent unrest at Taiwanese electronics giant Foxconn’s (TW: ) iPhone assembly plant in Zhengzhou. The protests stood out in that they included, in some places, a mass call for the resignation of the Chinese president, Xi Jinping, and the end of the Communist Party’s rule in the country. However, most of the protests over the weekend were non-violent, and the police were generally able to suppress a repeat of them on Monday.
The Chinese government gave no indication on Monday about whether or not it intends to change the course of the “zero corona” policy. Most of the protestors’ anger comes as a result of the reversal of the decision on relief by the authorities, which was announced in October, in what appears to be an automatic response to the increase in cases of infection with the corona epidemic.
2. Will the Fed estimate the Thanksgiving weekend in the US? The split in the ECB is in focus
The president of the New York Fed, and his counterpart at the St. Louis Fed, will deliver remarks later today that will be noteworthy if they show any hint of concern about the economy after anecdotal reports of weakness over the Thanksgiving weekend.
Analytical companies that follow the traffic in the stores hinted at only a modest increase in the presence of shoppers compared to last year, while it appears that the volume of sales decreased sharply in an adjusted calculation.
In Brussels, European Central Bank President Christine Lagarde will update the European Parliament on the state of the economy, amid an increasingly clear split between two of her most senior subordinates on the ECB’s executive board. Isabelle Schnabel warned last week of the continued need to tighten policy, while the bank’s chief economist, Philip Lane, published a distinctly June blog post on Friday, arguing against interpreting the higher wage increases this year as a sign of higher structural inflation.
3. The stock markets in the USA are expected to open with lower prices, against the background of the concerns surrounding China
US stock markets are expected to open lower later today, reflecting the growing uncertainty surrounding the outlook for China, although the risk seems to be of the two-way type.
While the markets tend not to like uncertainty in itself, and certainly not to like the prospect of unrest that may disrupt the output of factories and export centers, they must also recognize the risk that Beijing may agree to absorb a higher amount of cases of infection with the corona epidemic, as the price of a faster reopening. However, the media on behalf of the state did not provide a hint of this on Monday.
As of midday Monday, U.S. futures were down 178 points, or 0.5%, while U.S. futures were down 0.7%, and U.S. futures were down 0.8%.
Stocks expected to be in focus later today include chemicals company Univar (NYSE: ), which is being considered for acquisition by German rival Brenntag (ETR: ).
Also in focus will be shares of electric vehicle giant Tesla (NASDAQ: ), amid speculation that Beijing may use its leverage to pressure Elon Musk to limit coverage of the protests on Twitter.
The Dallas Fed’s monthly business index is the only noteworthy economic figure to be released today.
4. The Bahamas is fighting the US over the bankruptcy of the FTX exchange
Bahamian authorities have resisted US attempts to apply jurisdiction over Sam Bankman-Fried’s bankrupt empire.
Efforts by the US Bankruptcy Court in the state of Delaware to exercise control over customer deposits have been met with opposition from the Bahamas, which fears that the Delaware court will try to gain access to a much larger base of deposits of non-US customers, with the aim of paying off the creditors of the US FTX exchange operations.
“Any attempt to blame this whole scandal on the Bahamas, for the reason that the offices of the FTX exchange are located here, would be a gross oversimplification of reality,”
said the Attorney General, Ryan Pinder, in a televised address. Pinder blamed the failure on the improper conduct of multiple bad actors throughout FTX Exchange’s global operations, in contrast to FTX Exchange’s new CEO, John J. Ray, whose remarks focused on the actions of Bankman-Fried and his close associates.
5. The price of oil reaches its lowest point in 2022, when the oil giant Chevron receives a license in Venezuela
The price of crude oil fell to its lowest level this year as unrest in China made a sustained recovery in oil demand in the world’s second-largest economy look less likely. There was already a mass sale in the market during last week, amid signs of a sharp decrease in mobility in China’s major cities, as a result not only of the official restrictions, but also of the public fear of contracting the corona epidemic, in a country where the vaccination rate is low and vaccinations are less effective.
The market also absorbed the news that the U.S. renewed the license of oil giant Chevron (NYSE: of anything to help alleviate the contraction in global supply, although its impact in the short term is expected to be extremely limited.
As of midday Monday, U.S. crude futures fell 3.0% to $73.94 a barrel, while crude futures fell 3.1% to $81.13 a barrel.