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China’s Covid death weighs on stocks ahead of the FOMC meeting minutes release

China Covid

Wall Street was under pressure after China reported the first Covid death, sparking concerns about the country to return strict covid curb polices, while Walt Disney jumped 6% amid former CEO, Iger’s return, which buffered stocks’ drop and supported Dow’s outperformance. The US bond yields were little changed after San Francisco Federal Reserve President Mary Daly expressed concerns about the speed of rate hikes that could cause “overaction” by the markets. The Cleverland Fed President loretta Mester sees a smaller scale of rate hikes in December in an interview with CNBC. The most hawkish Fed member, St. Louis Fed President James Bullard, are to speak later today before the November FOMC meeting minutes release on Thursday. Overall, risk-off sentiment prevailed broad markets as US dollar strengthened, sending other major currencies and commodities lower, with WTI futures falling to a nearly two-month low of just below $80 per barrel. Elsewhere, the FTX contagion continued to spread, with Ethereum plunging towards key support of 1,100. Notably, the inversion on US 10-year and 2-year yields deepened further to 0.69, the widest since 1980s. 

Click to enlarge the table

 

  • Nasdaq pulls back from key resistance as rebounds in growth stocks took a breather, with most mega-cap tech giants finishing lower for the session, in which Microsoft the only stock that closed slightly higher.  4 out of 11 sectors in the S&P 500 were lower, with Consumer Discretionary, Technology, and Energy stocks leading losses, all down more than 1%, while Consumer Staples outperformed up 1%, along with positive close in Healthcare and Utilities, suggesting investors sought defensive stocks for safety. Tesla’s shares tumbled 6.7% on all the recent negatives, dragging down the other EV makers’ stocks, such as Rivian and Nio.
  • Disney’s shares jumped 6% after the company announced to replace Chapek with the former CEO Iger as the helm. Bob Iger served the company as CEO for 15 years before retirement in February 2020 when just before pandemic happened. The news is seen as positive to the entertainment giant after a terrible loss of $1.5 billion in the third quarter, heading towards the worst year since 1970s. 
  • Crude oil prices plunged 5% initially before bouncing back on the news that the OPEC+ may increase its output by 500,000 bpd in December, then the organisation denied the report. China’s Covid-death and a jump in the USD have also weighed on sentiment.
  • Ethereum plummeted 8%, approaching a one week low of 1,100, amid hackers’ $60 million worth of the digital coins according to Coinpedia.org. The source also mentioned that the hackers hold nearly $300 million worth of Ethereum and could cash out at any moment. This could ultimately cause the next round of meltdowns in the crypto world as the FTX contagion continues to spread.
  • Chinese shares retreated as China reported the first Covid Covid-death in six months, sparking concerns that the country may return to restrict containment measures. The Hang Seng Index fell 1.9% on Monday.
  • Asian equity markets are set to open mixed. ASX futures were up 0.42%, Nikkei 225 futures rose 0.29% and Hang Seng Index futures fell 0.32%.
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