Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Marketmind: China crisis brewing

Published 11/27/2022, 04:56 PM
Updated 11/27/2022, 05:05 PM
© Reuters. People hold blank sheets of paper during a demonstration against COVID-19 curbs following the deadly Urumqi fire, in Shanghai, China November 27, 2022. REUTERS/Josh Horwitz

© Reuters. People hold blank sheets of paper during a demonstration against COVID-19 curbs following the deadly Urumqi fire, in Shanghai, China November 27, 2022. REUTERS/Josh Horwitz

By Jamie McGeever

(Reuters) - A look at the day ahead in Asian markets from Jamie McGeever.

Purchasing managers index (PMI) data will be the key economic driver for Asian markets this week, but the tone will be set by the increasingly tense political situation in China.

Thousands of people are taking to the streets in several cities across the country in an unprecedented protest against the government's stringent COVID restrictions after a deadly apartment fire in Urumqi in the country's far west.

The wave of civil disobedience and clashes between protestors and police come amid mounting frustration over President Xi Jinping's signature zero-COVID policy. China has reported record new COVID cases for four straight days.

"Down with the Chinese Communist Party, down with Xi Jinping," a crowd in Shanghai shouted in the early hours of Sunday, according to witnesses and videos posted on social media.

It's safe to say that this does not happen very often, and the world is watching intently to see how Beijing handles the brewing crisis.

From an immediate market perspective, the COVID surge and nationwide unrest snuff out any hope China is about to re-open its economy. It doesn't seem that the restrictions will be lifted any time soon, and growth will continue to suffer.

In that vein, PMI figures on Wednesday are expected to show that Chinese factory and service sector activity shrank again in November, another sign that Beijing will maintain its loose monetary policy stance.

If so, the yuan is likely to come under renewed pressure, especially after the central bank on Friday said it would cut the amount of cash banks must hold as reserves, injecting about $70 billion of liquidity into the struggling economy.

China manufacturing PMI vs Reuters poll https://fingfx.thomsonreuters.com/gfx/mkt/myvmonqnwvr/CHINAPMI.jpg

China stocks vs manufacturing PMI https://fingfx.thomsonreuters.com/gfx/mkt/gkvlwgqgepb/CHINAPMI2.jpg

Three key developments that could provide more direction to markets on Monday:

- Australia retail sales (October)

© Reuters. People hold blank sheets of paper during a demonstration against COVID-19 curbs following the deadly Urumqi fire, in Shanghai, China November 27, 2022. REUTERS/Josh Horwitz

- Fed's Williams speaks

- ECB's Lagarde speaks

Latest comments

Hey Steve and Jason, can you please leave these comment sections for the people who have something to say about the news piece instead of cluttering it up with your sales pitches? It's getting really old having to scroll through your ****!
they are bots
For sure. It’s absolutely annoying. Dang spammers
robots. they want me to pay $70 for investing pro but they can't do anything about the bots...
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.