Stocks decline on China Covid worries; dollar up

Bloomberg

Stocks fall amid concern that China may tighten Covid curbs after a string of reported deaths, with investors seeking shelter in the dollar.
European equities edged lower, with mining stocks the biggest drag on the regional benchmark index. S&P 500 and Nasdaq 100 futures contracts both dropped by about 0.5%. Walt Disney Co. rallied more than 10% in New York premarket trading after the company brought back former leader Bob Iger as chief executive officer.
The dollar climbed against its Group-of-10 counterparts and emerging-market currencies. Treasuries gave back earlier gains. Oil sank on concern of a weakening demand outlook from China.
China saw its first Covid-related death in almost six months on November 19 and another two were reported. Worsening outbreaks across the nation are stoking concerns that authorities may again resort to harsh restrictions. A city near Beijing that was rumoured to be a test case for the ending of virus restrictions has suspended schools, locked down universities and asked residents to stay at home for five days.
“Financial markets have caught a cold amid worries that mounting Covid cases in China and a fresh tightening of restrictions will send a fresh shiver through manufacturing output and push down demand for raw materials,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
On the outlook for stocks, Goldman Sachs Group Inc. strategists said that investors hoping for a better year in 2023 would be disappointed, with the bear market phase not yet over.
“The conditions that are typically consistent with an equity trough have not yet been reached,” strategists including Peter Oppenheimer and Sharon Bell wrote in a note on Monday. They said that a peak in interest rates and lower valuations reflecting recession are necessary before any sustained stock-market recovery can happen.
Traders this week will also be looking to minutes of the most recent Federal Reserve policy meeting for more clues on the course of rate hikes.
Atlanta Fed President Raphael Bostic said he favours slowing the pace of interest rate increases, with no more than 1 percentage point more of hikes, to try to ensure the economy has a soft landing. Boston Fed President Susan Collins reiterated her view that options are open for the size of the December interest-rate increase, including the possibility of a 75 basis-point move.
Elsewhere, Hong Kong stocks led declines in Asia as investors weighed whether the recent rally on a China
reopening was overdone.
Cryptocurrency prices struggled in the ongoing crisis sparked by the downfall of Sam Bankman-Fried’s once powerful FTX empire.