Dow futures down 190 pts; China's COVID protests weigh on sentiment

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Dow futures down 190 pts; China's COVID protests weigh on sentiment

By Peter Nurse    

Investing.com -- U.S. stocks are seen opening lower Monday, with sentiment hit by the civil unrest in China over prolonged COVID restrictions, at the start of a week that includes the key November jobs report.

At 07:00 ET (12:00 GMT), the Dow Futures contract was down 190 points, or 0.6%, S&P 500 Futures traded 30 points, or 0.7%, lower, and Nasdaq 100 Futures dropped 85 points, or 0.7%.

The three main stock indices registered gains last week, even given the holiday-shortened conditions, on indications that the Federal Reserve will agree to slowing the pace of monetary tightening in December. 

The blue-chip Dow Jones Industrial Average closed 1.8% higher, the broad-based S&P 500 rose 1.5%, and the tech-heavy Nasdaq Composite gained 0.7% over the course of last week.

St. Louis Fed President James Bullard and New York Fed President John Williams are both due to speak later Monday, and their comments will be studied carefully for clues on the trajectory of interest rates, ahead of Fed Chair Jerome Powell on Wednesday.

That said, the week’s main focus will be on Friday’s U.S. jobs report for November as traders look for signs that the U.S. economy is struggling under the weight of this year’s aggressive interest rate rises.

It will be the last nonfarm payrolls report before the Fed’s final meeting of the year in December, and economists are expecting the U.S. economy to have added 200,000 new jobs, in what would be the smallest increase since December 2020.

Back to Monday, sentiment has been hit by the weekend demonstrations in a number of Chinese cities over the country’s strict mobility restrictions as COVID cases climb to record levels.

Frustration is mounting within the populace that the country is maintaining its zero-COVID policy three years after the first outbreak, after hope was raised earlier this month of a loosening of this stance.

Elsewhere, investors will be focused on how retailers are faring over the holiday shopping period, with online spending rising by 2.3% to a record $9.12 billion on Black Friday, according to a report by Adobe Analytics on Saturday.

Crude oil prices slumped Monday, as the rising COVID-19 cases in China, the world’s top crude importer, and the protests over the country’s strict mobility restrictions are likely to hit demand from this crucial source.

On the supply side, Group of Seven and European Union officials have been unable to agree on a level of a price cap on Russian oil, following initial discussions of between $65 and $70 a barrel.

The price cap is due to come into effect on Dec. 5 when an EU ban on Russian crude kicks off.

That’s the day after the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, are scheduled to next meet to discuss future output levels.

By 07:00 ET, U.S. crude futures traded 3.2% lower at $72.84 a barrel, while the Brent contract fell 3.2% to $81.04. The U.S. contract fell to its lowest since late December 2021, while the Brent contract dropped to its lowest since Jan. 11.

Additionally, gold futures rose 0.3% to $1,758.65/oz, while EUR/USD traded 0.8% higher at 1.0479.

 

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