Investors Hub World Daily Markets Bulletin Monday 28 November 2022

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Unrest In China May Weigh On Wall Street

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US Market

The major U.S. index futures are currently pointing to a lower open on Monday, with stocks likely to move to the downside following the mixed performance seen during last Friday’s shortened session.

Concerns about the latest developments in China are likely to weigh on Wall Street, as widespread protests against the Beijing’s zero-Covid policy broke out over the weekend.

A recent surge in new Covid cases in China has led officials to impose new restrictions in several major cities, dashing hopes the world’s second-largest economy was on the way toward easing curbs.

Trading activity may remain somewhat subdued, however, with a lack of major U.S. economic data likely to keep some traders on the sidelines.

Traders may be reluctant to make significant moves as they look ahead to the release of the closely watched monthly jobs report on Friday.

Reports on consumer confidence, personal income and spending and manufacturing activity are also likely to attract attention in the coming days along with remarks by Federal Reserve Chair Jerome Powell.

With trading activity remaining subdued following the Thanksgiving Day holiday on Thursday, stocks turned in a lackluster performance during trading on Friday. Despite the choppy trading, the Dow ended the session at a new seven-month closing high.

The major averages eventually finished the shortened session mixed. While the Dow climbed 152.97 points or 0.5 percent to 34,347.03, the S&P 500 edged down 1.14 points or less than a tenth of a percent to 4,026.12 and the Nasdaq slid 58.36 points or 0.5 percent to 11,226.36.

For the holiday-interrupted week, the Dow surged by 1.8 percent, the S&P 500 jumped by 1.5 percent and the Nasdaq advanced by 0.7 percent.

The lackluster performance on Wall Street came as many traders remained away from their desks following yesterday’s holiday.

An early close for the markets at 1 pm ET along with a lack of major U.S. economic data also contributed to below average trading activity.

Nonetheless, the major averages posted solid gains for the week due in part to optimism about slower interest rate hikes.

The minutes of the latest Federal Reserve meeting, released on Wednesday, provided further evidence the central bank is considering slowing the pace of its rate hikes as soon as next month.

The minutes said a “substantial majority” of meeting participants judged that a slowing in the pace of rate hikes would likely “soon be appropriate.”

A slower pace of rate hikes would better allow the Fed to assess progress toward its goals of maximum employment and price stability, the minutes said.

However, the Fed also said some participants felt the central bank will need to raise rates higher than previously expected in order to attain a sufficiently restrictive stance to bring inflation down.

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.

Semiconductor stocks showed a notable move to the downside, however, with the Philadelphia Semiconductor Index falling by 1.3 percent.

Gold, tobacco and oil service stocks also moved to the downside, while some strength was visible among airline, commercial real estate and utilities stocks.

 

U.S. Economic Reports

New York Federal Reserve President John Williams is scheduled to participate in a virtual conversation organized by the Economic Club of New York at 12 pm ET.

 

Stocks in Focus

Shares of Taboola.com (TBLA) are soaring in pre-market trading after the software company announced a 30-year, exclusive commercial agreement with Yahoo.

Brewer Anheuser-Busch InBev (BUD) is also likely to see initial strength after J.P. Morgan Securities upgraded its rating on the company’s stock to Overweight from Underweight.

On the other hand, shares of First Solar (FSLR) may move to the downside after J.P. Morgan downgraded its rating on the solar company’s stock to Neutral from Overweight.

 

Europe

Despite paring some early losses, European stocks are broadly in negative territory on Monday, with investors making cautious moves.

Rising concerns about growing unrest in China following the imposition of stringent Covid-related restrictions in several cities across the country has weighed on investor sentiment.

Several areas across China are witnessing protests, with some demonstrators even calling for the resignation of President Xi Jinping, as surging new Covid cases have prompted authorities to extend local lockdowns.

While the U.K.’s FTSE 100 Index has slid by 0.5 percent, the French CAC 40 Index is down by 0.9 percent and the German DAX Index is down by 1.0 percent.

In the UK market, Persimmon, Royal Mail, Admiral Group, Carnival, Segro, Scottish Mortgage, Barratt Developments, BP, BHP Group, TUI and Hikma Pharmaceuticals are posting notable losses.

In Paris, Airbus Group is down more than 3%. Dassault Systemes, TotalEnergies, STMicroElectronics, Saint Gobain, Legrand, Capgemini and Veolia have come under pressure

In the German market, shares of chemicals distributor Brenntag are plunging after the company confirmed that it had held preliminary takeover talks with U.S. rival Univar Solutions.

HelloFresh, Zalando, Vonovia, Sartorius, Puma and Infineon Technologies are also seeing significant weakness. Daimler, Siemens Healthineers, RWE and Porsche Automobil are also notably lower.

 

Asia

Asian stocks plunged on Monday amidst a flare-up in protests against China’s strict Covid curbs. The surging Covid caseload and the widespread protests in China dampened investor sentiment in most of the Asian markets. Sentiment also impacted commodity, bond and currency markets as well as global stock indexes.

China’s Shanghai Composite Index dropped 23.14 points or 0.8 percent to finish at 3,078.55. The day’s trading ranged between 3,034.70 and 3,080.18. The Shenzhen Component Index shed 75.19 points or 0.7 percent to close at 10,829.08.

The Japanese benchmark Nikkei 225 Index fell 120.20 points or 0.4 percent to end trading at 28,162.83. The day’s trading range was between 28,046.32 and 28,238.50.

Shinsei Bank was the biggest gainer with a 2.2 percent jump. Internet media company CyberAgent, which is providing free streaming of football World Cup matches, dropped more than 7 percent after Japan lost a world cup match. JFE Holdings and Kobe Steel both declined more than 3 percent.

The Hang Seng Index of the Hong Kong Stock Exchange lost 275.64 points or 1.6 percent from the previous close to finish trading at 17,297.94. The day’s trading range was between a high of 17,364.21 and a low of 16,833.68.

The Korean Stock Exchange’s Kospi Index slumped 29.59 points or 1.2 percent to close trading at 2,408.27. The day’s trading range was between 2,401.95 and 2,425.65.

Australia’s S&P/ASX200 Index closed trading at 7,229.10 after shedding 30.40 points or 0.42 percent. The day’s trading was between 7,216.00 and 7,259.50.

Mining business New Hope Corporation was the top gainer with a 5.4 percent rally. Whitehaven Coal, another mining business, also added close to 4 percent. Building materials company Brickworks gained more than 3 percent.

Healthcare business Healius dropped more than 10 percent after its latest trading update revealed a drop in revenues. Weak commodity prices dragged down mining stocks.

Mining business Liontown Resources declined 7.5 percent whereas gold miner Ramelius Resources and battery materials company Novonix, both dropped more than 6 percent.

The NZX 50 Index of the New Zealand Stock Exchange shed 74.25 points or 0.7 percent to close at 11,308.31. Trading ranged between 11,280.74 and 11,382.56.

Despite the negative trend, stocks of retirement village companies rose following reports of government funding. Oceania Healthcare was the top gainer with a 6.4 percent surged. Arvida Group added 4.4 percent. Summerset Group Holdings gained 2.8 percent. Electronic components maker EROAD also gained 3.4 percent.

Weak commodity prices dragged down energy stocks. Mercury NZ and Genesis Energy both declined more than 4 percent. Software business Vista Group International also declined close to 4 percent.

 

Commodities

Crude oil futures are plunging $2.09 to $74.19 a barrel after tumbling $1.66 to $76.28 a barrel last Friday. Meanwhile, after climbing $8.40 to $1,754 an ounce in the previous session, gold futures are edging down $0.10 to $1,753.90 an ounce.

On the currency front, the U.S. dollar is trading at 138.50 yen versus the 139.19 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0450 compared to last Friday’s $1.0395.

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