By Jeffrey Smith
Investing.com – The number of Covid cases in China skyrocketed to levels last seen in April, with Guangzhou and Chongqing emerging as hot spots. The Fed and ECB are ready for rate hikes of just 50 basis points at their next meetings, officials said. Zoom Video slides into premarket after disappointing current quarter outlook. Troubled crypto broker Genesis struggles to bridge a $1 billion liquidity shortfall, and oil is whipping as two major Gulf producers pooh-pooh the idea of a production increase. Here’s what you need to know in the financial markets on Tuesday, March 22nd November.
1 China’s Covid woes are mounting
The number of Covid-19 cases in China shot back to levels last seen in April during the Shanghai outbreak, making the prospect of a relaxation of the Zero Covid policy increasingly distant.
The number of confirmed cases across the country reached 28,000, with major manufacturing centers of Guangzhou in the south and Chongqing in central China being the two worst affected cities.
Analysts at Nomura now estimate that about a fifth of China’s economy is now operating under some Covid-related restriction, even if that doesn’t always mean a strict lockdown. The economic impact of actual containment measures is likely to be amplified by consumers’ personal choices to avoid contracting the disease, analysts warn. That means even more problems for the consumer sector, especially the entertainment and hospitality sector.
2. In the US and the Eurozone, 50 is the new 75
Loretta Mester and Mary Daly joined the list of Federal Reserve officials, indicating that the Federal Reserve will rise more slowly going forward, while simultaneously warning that the central bank is still not done hiking.
“I don’t think we’re anywhere near stopping,” news reports quoted Cleveland Fed President Mester, adding that market expectations of a peak around 5% in Fed Funds rates were not far off.
The San Francisco Fed President has been clear on the risks of the Fed’s over-tightening policy amid growing signs that an increasing portion of the economy is slowing. Esther George of Kansas City and James Bullard of St. Louis will speak later.
Also in Europe, Germany’s central bank head Joachim Nagel said he would be happy with one of just 50 basis points at the next ECB meeting, saying such a move would still be “substantial”. Nagel also said he wants the ECB to begin “quantitative tightening” early in the new year.
3 Stocks set at higher edge; Zoom slips on weak guidance
US stock markets will open slightly higher later and are already showing signs of slowing in the run-up to Thanksgiving Day.
At 06:25 ET (11:25 GMT), we were up 41 points, or 0.1%, while up 0.1% and up a similar amount.
News from China continues to put a modest brake on sentiment Zoom videos (NASDAQ:) weak Q4 outlook was another reminder of the post-pandemic bust in some tech stocks that have yet to run.
Medtronic (NYSE:), Best Buy (NYSE:), Dollar Boom (NASDAQ:), Campbell Soup (NYSE:) and Analog devices (NASDAQ:) are all set to report earnings early, while HPs (NYSE:) post-bell update will provide some insight into the state of the PC market.
4. Genesis struggles to cover its $1 billion shortfall
Crypto’s troubles are not going to end anytime soon, it seems. Genesis, the brokerage hampered by the FTX stock market collapse, was forced to deny reports it was considering filing for bankruptcy protection after failing — so far — to raise $1 billion to close its funding shortfall. cover.
Bloomberg had reported that Genesis – which last week suspended customer withdrawals due to liquidity issues – had approached Binance and Apollo Global Management (NYSE:) for a cash injection, but was rejected by both. Neither company has publicly confirmed the report, but Genesis told Reuters it has “no immediate plans” to follow FTX into Chapter 11.
FTX’s bankruptcy trustees, meanwhile, have found some more money that may still be salvaged from the wreckage, bringing the total to $1.24 billion, according to the Financial Times. Separate reports indicate that parties associated with founder Sam Bankman-Fried purchased properties worth more than $120 million in the Bahamas prior to the collapse.
5. Oil whipsaws as Saudi, Kuwait denies production hike report
Crude oil prices rallied after Saudi Arabia and Kuwait denied a Wall Street Journal report that the desert kingdom is considering urging OPEC to increase production at its next meeting.
At 06:35 ET, prices were up 1.3% to $81.06 a barrel, having previously fallen to $75.89 (the lowest since early January), while futures were up 1.3% to $88.62.
The prospect of even more mobility restrictions in China continues to weigh in, but as usual at 4:30 p.m. ET, may find a correction in US inventory data expected by the American Petroleum Institute.