China eases COVID restrictions as markets await further economic data

Market Reports

by Lauren Hayes

Stocks fell in a choppy session Wednesday as traders weighed the possibility of a recession, and the likelihood of a longer-than-expected hiking cycle from the Federal Reserve.
Next week, the central bank is widely expected to deliver a 50 basis point rate hike. While the move would mark a step down from the previous four rate hikes, concerns are swirling over whether the Fed can engineer a so-called ‘soft landing’.

Investors await more economic data this week with jobless claims data due out Thursday, and November’s producer price index and preliminary consumer sentiment data for December out on Friday.

The S&P 500 declined 0.2 per cent with the Dow Jones Industrial Average unchanged, despite gains from 3M and Home Depot. The Nasdaq Composite shed 0.5 per cent.

And China has issued a broad easing of pandemic restrictions. The moves include reducing the frequency of required Covid testing and allowing those with mild infections to isolate at home, instead of at a hospital. Beijing’s zero-Covid policies led to widespread protests and weighed heavily on the Chinese economy. However, US listed Chinese companies failed to rally on the news.

On the EV front - Hyundai is the latest OEM to offer EV owners an entire home energy system, complete with solar panels and battery storage, following companies like Tesla and GM. Global EV sales are set to more than triple between 2021 and 2025, but the emissions footprint of an EV is highly dependent on the carbon intensity of the electricity used to charge it.

And Lithium Prices are expected to pullback amid a slowdown in EV Sales, primarily due to rising supplies and subsidy cuts by China for electric vehicles. Battery grade lithium prices are trading near $85,000 a tonne, which is more than double the levels seen at the start of 2022 and four times the levels seen in September 2021. China is expected to remain by far the top single country for EV sales for many more years, but the pace of demand growth is slowing.

That said the producers are rushing to bring new projects online considering lithium demand is expected to grow at an exponential pace over the long term alongside accelerating demand for EVs.

The price of oil fell to its lowest level this year on Wednesday, forfeiting all of the gains since Russia’s invasion of Ukraine exacerbated the worst global energy supply crisis in decades.

And Google has just released its top trending finance-related searches. Leading the list this year: “How to buy bonds,” “what is a bear market,” and “why is gas so expensive.”

Across the sectors, Healthcare and defensives were among the leaders. It was a mixed bunch overnight, though some of the recent rotational winners led again. Healthcare extended some recent rotational gains with upside across hospitals, managed care, pharma, and medtech.

And US banks are preparing for leaner times. Morgan Stanley yesterday laid off about 1,600 workers, or 2 percent of its staff. That followed cuts at Barclays, Citigroup and Goldman Sachs. Even those left behind are set to feel some pain; bonuses are expected to be down by as much as 45 percent.

Bank CEOs at Goldmans Sachs’s annual financial services conference this week are worried about the global economy, as consumer spending dries up and there are warning signs of a slowdown in 2023. Wall Street thinks the economy will get worse.

Figures around the globe

Across the Atlantic, European markets closed lower. Paris fell 0.4 per cent, Frankfurt lost 0.6 per cent and London’s FTSE closed 0.4 per cent lower.

In Asian markets, Tokyo’s Nikkei lost 0.7 per cent, Hong Kong’s Hang Seng dropped 3.2 per cent and China’s Shanghai Composite closed 0.4 per cent lower.

Yesterday, the Australian sharemarket lost 0.9 per cent to close at 7229.


Fisher & Paykel Healthcare Corp (ASX:FPH) is paying 16.2052 cents unfranked
HiTech Group Australia (ASX:HIT) is paying 1.5 cents franked
Select Harvests (ASX:SHV) is paying 2 cents franked

Dividends payable

Embark Education (ASX:EVO)

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


The views, opinions or recommendations of the commentators in this presentation are solely those of the author and do not in any way reflect the views, opinions, recommendations, of Sequoia Financial Group Limited ABN 90 091 744 884 and its related bodies corporate (“SEQ”). SEQ makes no representation or warranty with respect to the accuracy, completeness or currency of the content. Any prices published are accurate subject to the time of filming and shouldn’t be relied upon to make a financial decision. Commentators may hold positions in stocks mentioned and companies may pay FNN to produce the content at times. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian Financial Services Licensee before making investment decisions. To the extent permitted by law, SEQ excludes all liability for any loss or damage arising in any way including by way of negligence.

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