Massive anti-Covid protests in the biggest Chinese cities marked the weekend. Despite rising Covid cases and renewed Covid measures, thousands of Chinese citizens gathered to show their discontent with Xi Jinping’s Covid zero strategy, that nailed millions at home for months, without any progress.
As a result, three years have gone by since the pandemic started, and the health risks in China are higher than ever. Due to extremely strict lockdown measures, the Chinese population had no chance to develop collective immunity, the vaccination rate is low, and the vaccines are not efficient.
The new Covid variants are less deadly, but they spread more rapidly. And experts say, if China reopened tomorrow, Covid would spread like wildfire and kill thousands, simply because people are not immune enough and the health system is not ready for the shock.
This means the Chinese reopening won’t be a piece of cake; it looks like the Chinese economy may further suffer, either from endless and pointless lockdown measures, or from a severe health crisis.
Weak sentiment on China COVID-19 worries
The week kicked off on a bad mood in the Asian markets. Australian and Chinese stock markets were painted in red. The Hang Seng index dived more than 2% in Hong Kong, and crude oil has already lost more than 3% at the time of writing.
Uncertainty around the Chinese reopening sent the barrel of US crude below the $75/76 support, and the next natural target for the oil bears stands at the $70 psychological support.
One factor that could slow down bleeding in oil is the upcoming OPEC meeting, scheduled for December 4. OPEC could use the Chinese excuse to further restrict outlook and hope to throw a floor under the crude selloff.
But the bears have the upper hand right now, and any price rallies should bump into solid resistance within the $77/80 range.
Record Black Friday sales hammer the idea of a consumer-led recession in the US
Had there been no protests in China, I would’ve started writing about the record Black Day sales in the US this year, that should hammer the joy around a potential Federal Reserve (Fed) pivot on softening US economy.
But the US shoppers spent more than $9 billion in online sales on Friday, and Cyber Monday is also expected to be a record-breaking one, with more than $11 billion to be spent.
This is not exactly what you expect to hear when you think that the US will enter a consumer-led recession in couple of weeks from now.
The strength of the latest retail sales data, combined to Black Friday figures may revive the Fed hawks this week, especially if the US jobs data, and the latest GDP update print strong numbers.
On Wednesday, the US Q3 growth could be revised slightly higher, and due Friday, the nonfarm payrolls are expected to print 200’000 job additions in November. It’s still a lot.
The US dollar kicked off the week on a bullish note. The EURUSD slipped below the 200-DMA, near 1.0380. The S&P500 index closed last week at the highest levels since mid-September, and stands a couple of points from the year-to-date descending channel top, which could bring topsellers in, especially if strong data revives the idea that the Fed has no reason to stop hiking its interest rates.
