(Bloomberg) — Shares were under downward pressure and the dollar climbed as markets opened in Asia on Monday to news of growing unrest in China over Covid restrictions.
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US stock futures and Australian equities fell. The greenback made some of its biggest early gains against the currencies of Australia and South Africa, both of which are exposed to trade with China.
The offshore yuan dropped. Stock futures for Hong Kong already pointed toward declines even before protests in China worsened over the weekend. A gauge of US-listed Chinese shares fell on Friday.
“The near-term clarity suggests we might see some derisking around Chinese markets,” said Chris Weston, head of research at Pepperstone Group Ltd. “We are seeing some outflows of the offshore yuan, which I think is a pretty good indication of how Chinese markets may fare,” he said, while adding that the outlook for China over the longer term remains relatively robust.
Oil was little changed after suffering a third weekly loss. Gold was also steady.
Treasuries may find support on bids for safe assets, though moves could be complicated by Thursday’s holiday in the US, followed by shortened trading on Friday. Yields on the benchmark 10-year maturity edged down to 3.68% Friday.
Yields on Australian and New Zealand government bonds edged higher.
The downbeat mood emanating from China contrasts with the boost to sentiment in global markets last week after the Federal Reserve’s Nov. 1-2 meeting minutes showed most officials backing slowing the pace of interest-rate hikes.
Fed Focus
Since the Fed’s latest meeting, investors have parsed a bevy of economic data that somewhat eased inflation concerns, further strengthening the case for smaller rate hikes.
The S&P 500 notched a weekly gain of 1.5% that took the index to the highest level since early September. The Nasdaq 100 also eked out a gain for the week.
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