China’s continued Covid lockdown impacting oil and commodity prices, as Chinese protest

 

The Dow Jones Industrial Average rose Friday, notching a gain during the holiday-shortened trading week.

Worries about continued lockdowns in China kept markets in check. The country is ramping up Covid restrictions after seeing climbing case counts in recent days – however unprecedented demonstrations are now breaking out across Chinese cities and university campuses, triggered by widespread anger at stringent Covid restrictions that have been imposed now for almost three years. These are the biggest protests in China since Tiananmen Square

This week also sees a speech by Fed chair, Jay Powell which will have a big impact on the markets, especially as it will be this last speech before the important two day Fed meeting in mid-December.

The week is very busy in Australia with lots of data, especially on house prices and retail sales, plus a string of company annual meetings.

The Dow rose 152.97 points, or 0.45 per cent to 34,347.03, marking the third consecutive session of gains. The S&P 500 fell 0.03 per cent to end the day at 4,026.12. The Nasdaq Composite slipped 0.52 per cent to 11,226.36

All three indexes ended the week higher. The Dow is up 1.78 per cent, and the S&P 500 is up 1.53 per cent during the short week. The tech-heavy Nasdaq is lagging the other two indexes but is still up 0.72 per cent in the same timeframe.

The real action in is in the corporate bond market with Investors having poured almost $16bn in to US corporate bond funds this month, underscoring how signs of easing inflation have helped brighten sentiment after a brutal sell-off in much of 2022. Funds holding high-grade bonds have attracted $8.6bn of new client money in the month to November 23, while those focused on riskier junk-rated debt have posted net inflows of $7.1bn.

The surge of inflows into credit funds comes after data released earlier in November showed the pace of consumer price growth has started to ease, prompting hopes that the Federal Reserve may soon slow down its aggressive rate rises.

Investors appear to be keen to lock in higher yields after this year’s sell-off sent them soaring. The average yield on the Ice index of high-grade corporate bonds is 5.4 per cent, down from an October peak of more than 6 per cent, but well above the 2.4 per cent from the end of 2021. It looks like investors are positioning themselves with the view that rates are about to peak.

Across the sectors, energy continues to underperform as oil prices fell on Friday in thin market liquidity, closing a week marked by worries about Chinese demand and haggling over a Western price cap on Russian oil.

Worst performing thematics included lithium stocks, China listed companies & streaming companies

Currency

One Australian dollar at 7:10 AM is  buying 67.23 US cents.

Commodities

Iron ore futures are pointing to a 3.4 per cent gain.

Gold added 0.5 per cent. Silver gained 0.4 per cent. Copper rose 0.3 per cent and oil fell 2.1 per cent.

Futures

The SPI futures are pointing to a 0.1 per cent fall.

Figures around the globe

Across the Atlantic, European markets closed higher. Paris added 0.1 per cent, Frankfurt closed flat and London’s FTSE closed 0.3 per cent higher.

In Asian markets, Tokyo’s Nikkei fell 0.4 per cent, Hong Kong’s Hang Seng lost 0.5 per cent and China’s Shanghai Composite closed 0.4 per cent higher.

On Friday, the Australian sharemarket added 0.2 per cent to close at 7259.

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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