China’s COVID protests weigh on European shares; Airbus tumbles

Nov 28 (Reuters) – Europe’s STOXX 600 index fell on Monday, in line with a rout in global markets on economic jitters due to rare protests in China against stringent COVID-19 curbs, while shares of Airbus slid 5.7% on a report the planemaker may delay some jet deliveries.

The pan-European index closed 0.7% lower, slipping from last week’s peak which was the highest in more than three months.

Police stopped and searched people at the sites of weekend protests in Shanghai and Beijing, after crowds there and in other Chinese cities demonstrated against stringent COVID-19 measures disrupting lives three years into the pandemic.

China posted record-high COVID-19 infections on Monday, raising worries about the management of the country’s zero-COVID policy and its impact on the world’s second-largest economy.

“A widening of infections could add to supply chain interruptions, with China’s problems spilling into global markets,” Mark Haefele, chief investment officer at UBS Global Wealth Management wrote in a note to clients.

“Social discontent related to zero-COVID adds to execution and implementation risks for the government. We do not expect economic or market headwinds in China to abate significantly over the coming months.”

European oil stocks dipped 1.4% as crude prices, fell on worries about the outlook for the world’s biggest crude importer, while China-exposed automakers and luxury, also slipped.

The benchmark STOXX 600 notched its sixth consecutive weekly gain on Friday, marking a recovery of about 15% from its September lows on hopes that the Federal Reserve will shift to smaller interest rate hike amid signs of cooling US economy.

US jobs data later this week might shift expectations around the Fed’s policy move in December, with traders currently anticipating a 50-basis-point rate hike.

Preliminary reading of euro zone inflation for November is due on Wednesday, with the numbers expected to show a slight cooling from the record levels hit in October.

European Central Bank chief Christine Lagarde said inflation has not peaked and it risks turning out even higher than currently expected, hinting at a series of interest rate hikes ahead.

Credit Suisse’s shares dropped 4.2% to log a record closing low, while the cost of insuring its debt against default rose as the Swiss bank struggled to win over rattled investors following an exodus of client cash and with more litigation on the horizon.

Brenntag SE tumbled 9.7% after the German chemicals distributor said it held preliminary discussions for a potential acquisition with US rival Univar Solutions Inc.

Airbus slid 5.7% after Reuters reported the planemaker may delay planned delivery dates of some medium-haul aircraft in 2023 even as it races to meet delivery targets for 2022 in the face of supply chain and labour problems.

(Reporting by Sruthi Shankar and Devik Jain in Bengaluru; Editing by Uttaresh.V, Sherry Jacob-Phillips and David Gregori)

Japan’s Nikkei slips amid China COVID worries; tech shares slide

TOKYO, Nov 28 (Reuters) – Japan’s Nikkei share average slid for a second straight session on Monday, as protests in China over renewed COVID-19 clampdowns hurt investor sentiment, while tech stocks declined in line with their Wall Street peers.

The Nikkei ended the day down 0.42% at 28,162.83. The index closed 0.35% lower on Friday after hitting a more than two-month high in the session before.

Of the Nikkei’s 225 components, 173 fell, 45 rose and seven closed flat.

The broader Topix sank 0.68%.

Selling in Japanese stocks accelerated after Chinese and Hong Kong equity markets opened sharply lower, with the Hang Seng index tumbling 4.2% at one point. However, both the Nikkei and Topix indexes ended the day well off their lows.

A wave of protests unprecedented under Xi Jinping’s rule has swept China, including clashes with police in Shanghai, after the government doubled down on pandemic restrictions to contain a surge in COVID cases.

“This news is definitely a negative for Japanese stocks, especially the tech sector, which has large exposure to Chinese markets and supply chains,” said Kenji Abe, an equity strategist at Daiwa.

“A slowdown in the Chinese economy will have a big impact on the Japanese stock market.”

Tech stocks were already under pressure after Apple fell sharply on Friday following a report that COVID restrictions would further cut output at its flagship iPhone factory in China. The Philadelphia SE Semiconductor Index also sagged 1.26% on Friday.

Chipmaking equipment makers Tokyo Electron and Advantest dropped 1.56% and 0.54%, respectively.

Startup investor SoftBank Group – which is heavily invested in Chinese tech companies including Alibaba and Didi – slid 0.61%.

Nintendo and Sony slumped 0.89% and 0.78% respectively, also weighed down by a stronger yen that cut the outlook for overseas revenue.

Toyota and Honda fell 1.05% and 0.53%, respectively.

(Reporting by Kevin Buckland; editing by Uttaresh.V and Subhranshu Sahu)

Philippines raises USD 170 million via T-bill auction

MANILA, Nov 28 (Reuters) – Following are the results of the Philippine Bureau of the Treasury’s (BTr) auction of T-bills on Monday:

* BTr awards total of 9.62 billion pesos (USD 169.46 million) vs 15 billion pesos offer

* BTr awards 5 billion pesos of 92-day T-bills at 4.205% avg yield

* BTr awards 2.1 billion pesos of 183-day T-bills at 4.92% avg yield

* BTr awards 2.52 billion pesos of 365-day T-bills at 5.15% avg yield

* Details are on the BTr’s website

(USD 1 = 56.77 Philippine pesos)

(Reporting by Enrico Dela Cruz; Editing by Ed Davies)

Gold dips as dollar ticks up on China COVID risks

Nov 28 (Reuters) – Gold prices slipped on Monday, as investors preferred the safe-haven dollar amid protests in several Chinese cities over the country’s strict COVID-19 restrictions.

Spot gold was down 0.3% at USD 1,750.20 per ounce, as of 0745 GMT. US gold futures fell 0.2% to USD 1,750.10.

The dollar index was up 0.2%, making the greenback-priced bullion more expensive for buyers holding other currencies.

“Gold prices have been tracking the US dollar’s moves closely, and increased uncertainty from the growing unrest in China seems to be underpinning the dollar this morning,” said IG Market strategist Yeap Jun Rong.

Hundreds of demonstrators and police clashed in Shanghai on Sunday night as protests over China’s stringent COVID restrictions flared for a third day and spread to several cities in the wake of a deadly fire in the country’s far west.

Meanwhile, China on Monday reported a fifth straight daily record of new local coronavirus cases.

People may be shifting to defensive assets considering the COVID situation in China, but the dollar’s gains are currently overshadowing gold’s safe-haven status, Yeap said.

Next on investor radar is Federal Reserve Chair Jerome Powell’s Wednesday speech on the US economy and labour market for clues on the monetary policy outlook.

A majority of market participants are pricing in a 50 basis-point increase at the Fed’s December meeting after minutes of the last policy meeting signalled a slower pace of hikes.

Higher interest rates increase the opportunity cost of holding the non-yielding metal.

The ADP National Employment report and the US Labor Department’s nonfarm payrolls data due later this week will also be scanned for their likely influence on the Fed’s rate-hike strategy.

Spot gold may revisit its Nov. 23 low of USD 1,727.50 per ounce, according to Reuters technical analyst Wang Tao.

Silver slipped 1.5% to USD 21.27, platinum rose 0.1% to USD 981.77 and palladium lost 0.1% to USD 1,851.56.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Subhranshu Sahu and Uttaresh.V)

Dollar gains, yuan slides as China’s COVID unrest spooks markets

SINGAPORE, Nov 28 (Reuters) – The dollar climbed on Monday as protests against COVID restrictions in China rattled financial markets, sending the yuan sliding and pushing nervous investors toward the safe-haven greenback.

The COVID protests have flared across China and spread to several cities in the wake of a deadly fire in Urumqi in the country’s far west, with hundreds of demonstrators and police clashing in Shanghai on Sunday night.

Worries over the unprecedented wave of civil disobedience in a country where in-person protests are rare, the rising COVID cases, as well as how Beijing will react to the situation kept investors on edge.

The offshore yuan fell to an over two-week low in Asian trading, and was last roughly 0.6% lower at 7.24 per dollar.

The Australian dollar, often used as a liquid proxy for the yuan, slid more than 1% to USD 0.6687. The kiwi slumped 0.65% to USD 0.62065.

“The pushback from residents that we’ve been seeing, obviously the rising tensions and protests … that was something we probably haven’t been expecting to that degree,” said Chris Weston, head of research at Pepperstone.

“We’re really looking at the government response to what’s happening … the government response is so unpredictable, and of course that just means derisking.”

The stringent COVID restrictions have taken a heavy toll on China’s economy, and authorities have implemented various measures to revive growth. On Friday, the People’s Bank of China (PBOC), the nation’s central bank, said it would cut the reserve requirement ratio (RRR) for banks by 25 basis points (bps), effective from Dec. 5.

“If the RRR cut is the only monetary policy tool that the PBOC is going to implement, it may not lead to a significant increase in bank lending,” said Iris Pang, chief economist for Greater China at ING.

“Companies are currently facing weaker retail sales from a higher number of COVID cases and falling home prices from unfinished home projects.”

Elsewhere, the euro fell 0.43% to USD 1.03575, while sterling was down 0.51% at USD 1.2027.

The latest developments in China have put a pause on the US dollar’s decline, which had been softening over the past few weeks on hopes that the Federal Reserve would soon slow its pace of rate hikes – a view that was supported by the November meeting minutes released last week.

Against a basket of currencies, the US dollar index firmed to 106.34, edging away from its recent three-month low of 105.30.

Fed Chair Jerome Powell is due to speak on the outlook for the US economy and the labour market at a Brookings Institution event on Wednesday, which will likely provide more clues on the US monetary policy outlook.

Market expectations of a less hawkish Fed have helped the Japanese yen gain a footing, said Moh Siong Sim, a currency strategist at Bank of Singapore.

The yen was up about 0.5% to 138.46 per dollar.

“The market is thinking that the Fed downshifts to a 50-basis-point rate hike and perhaps going to a pause next year, and that might limit the upside in US (Treasury) yields. And dollar/yen is probably queuing into that sort of idea.”

(Reporting by Rae Wee; Editing by Shri Navaratnam)

Oil falls over USD 2 a barrel as China’s COVID protests fuel demand fears

TOKYO, Nov 28 (Reuters) – Oil futures fell more than USD 2 a barrel on Monday, with WTI hitting an 11-month low, as protests in top importer China over strict COVID-19 curbs fuelled demand concerns.

Brent crude dropped USD 2.16, or 2.6%, to trade at USD 81.47 a barrel at 0230 GMT, after diving to USD 81.16 earlier in the session — its lowest since Jan. 11.

US West Texas Intermediate (WTI) crude slid USD 2.08, or 2.7%, to USD 74.20 a barrel. It fell as far as USD 73.82 earlier — its lowest since Dec. 27, 2021.

Both benchmarks, which hit 10-month lows last week, have posted three consecutive weekly declines. Brent ended the latest week down 4.6%, while WTI fell 4.7%.

“On top of growing concerns about weaker fuel demand in China due to a surge in COVID-19 cases, political uncertainty, caused by rare protests over the government’s stringent COVID restrictions in Shanghai, prompted selling,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

WTI’s trading range is expected to fall to USD 70-USD 75, he said, adding the market could stay volatile depending on the outcome of the OPEC+ meeting and the price cap on Russian oil.

China, the world’s top oil importer, has stuck with President Xi Jinping’s zero-COVID policy even as much of the world has lifted most restrictions.

Hundreds of demonstrators and police clashed in Shanghai on Sunday night as protests over China’s strict COVID restrictions flared for a third day and spread to several cities in the wake of a deadly fire in the country’s far west.

The wave of civil disobedience is unprecedented in mainland China since Xi assumed power a decade ago, as frustration mounts over his zero-COVID policy nearly three years into the pandemic.

“Bearish sentiment is growing in the oil market with mounting concerns over demand in China and a lack of clear signs from oil producers to further cut output,” said Tetsu Emori, CEO of Emori Fund Management Inc.

“Unless OPEC+ agrees on a further reduction of production quota or the United States moves to reload its strategic petroleum reserves, oil prices may be headed further down,” he said.

The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, will meet on Dec. 4.

In October, OPEC+ agreed to reduce its output target by 2 million barrels per day through 2023.

The next OPEC+ meeting will take into account the condition and balance of the market, Iraq’s state news agency quoted Saadoun Mohsen, a senior official at the country’s state oil marketer SOMO, as saying on Saturday.

Investors also focused on Western plans for a price cap on Russian oil.

Group of Seven(G7) and European Union diplomats have been discussing a price cap on Russian oil of between USD 65 and USD 70 a barrel, with the aim of limiting revenue to fund Moscow’s military offensive in Ukraine without disrupting global oil markets.

But a meeting of European Union government representatives, scheduled for Nov. 25 evening to discuss the issue, was cancelled, EU diplomats said. On Thursday, EU governments were split on the level at which to cap Russian oil prices.

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

(Reporting by Yuka Obayashi; Editing by Himani Sarkar and Ana Nicolaci da Costa)

US crude turns positive, Brent pares losses on OPEC+ cut rumors

Nov 28 (Reuters) – Global oil benchmarks pulled back from their lowest levels in nearly a year on Monday, with US crude ending positive, bolstered by talk of an OPEC+ production cut that offset concerns about strict COVID-19 curbs in China, the world’s biggest crude importer.

Price action was volatile. US West Texas Intermediate (WTI) crude settled up 96 cents, or 1.3%, at USD 77.24, after earlier touching its lowest since December 2021 at USD 73.60.

Brent crude also briefly turned positive, but settled down 44 cents, or 0.5%, at trade at USD 83.19 a barrel, having slumped more than 3% to USD 80.61 earlier in the session for its lowest since Jan. 4, 2022.

Both benchmarks have posted three consecutive weekly declines.

“The word on the street is there’s rumor that OPEC+ is already starting to float the idea of a production cut on Sunday,” said Matt Smith, lead oil analyst at Kpler. “That’s helped reverse losses that were caused overnight by Chinese protests.”

Analysts at Eurasia Group suggested in a note Monday that weakened demand out of China could spur the Organization of the Petroleum Exporting Countries and allies including Russia to cut output after reducing supply in October.

“The decision will depend on the trajectory of the oil price when OPEC+ meets and how much disruption is evident in markets because of the EU sanctions,” the group wrote in its note.

OPEC+ will meet on Dec. 4. In October, OPEC+ agreed to reduce its output target by 2 million barrels per day through 2023.

The rumors of a possible cut outweighed an earlier sell-off built on the weak outlook out of China, where hundreds of demonstrators and police clashed on Sunday over strict COVID restrictions that have limited free moment among millions of residents.

China has stuck with President Xi Jinping’s zero-COVID policy even as much of the world has lifted most restrictions.

Speculative buyers also helped reverse early losses, said Robert Yawger, director of energy futures at Mizuho in New York.

“Pretty much every time we have a multiple percentage point move lower, you’ll see the specs come in in the afternoon and buy the dip,” he said.

Group of Seven (G7) and European Union diplomats have been discussing a price cap on Russian oil of between USD 65 and USD 70 a barrel, with the aim of limiting revenue to fund Moscow’s military offensive in Ukraine without disrupting global oil markets, and will meet again on Monday.

However, EU governments were split on the level at which to cap Russian oil prices, with the impact being potentially muted.

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

(Reporting by Nia Williams; Additional reporting by Noah Browning in London, Yuka Obayashi in Tokyo and Mohi Narayan in New Delhi; Editing by Marguerita Choy, Chris Reese and Cynthia Osterman)

Stocks, oil skid as China’s COVID protests roil sentiment

SYDNEY, Nov 28 (Reuters) – Stocks and oil slid sharply on Monday as rare protests in major Chinese cities against the country’s strict zero-COVID curbs raised worries about management of the virus in the world’s second-largest economy.

MSCI’s broadest index of Asia-Pacific shares outside Japan slumped 2.2%, pulled lower by heavy selling in Chinese markets.

Hong Kong’s Hang Seng Index shed 4.16%, China’s CSI300 Index declined 2.22% and the yuan fell in morning trade.

“The market does not like uncertainties that are difficult to price and the China protests clearly fall into this category. It means investors will become more risk-averse,” Gary Ng, Natixis economist in Hong Kong told Reuters.

“The China-linked markets across Asia, such as Australia, Hong Kong, Taiwan and Korea, are more likely to see a larger impact.”

Australia’s benchmark stock index lost 0.56% while its currency was off more than 1%. Japan’s Nikkei stock index was down 0.76%.

South Korea’s KOSPI 200 index retreated 1.35% in early trade and New Zealand’s S&P/NZX50 Index was off 0.42%.

S&P 500 and Nasdaq futures both fell, pointing to possible declines in Wall Street later in the day.

The bigger worries about China’s COVID policies dwarfed any support to investor sentiment from the central bank’s 25 basis point cut to the reserve requirement ratio (RRR) announced on Friday, which frees up about USD 70 billion in liquidity to prop up a faltering economy.

In Shanghai, demonstrators and police clashed on Sunday night as protests over the country’s stringent COVID restrictions flared for a third day.

There were also protests in Wuhan, Chengdu and parts of the capital Beijing as COVID restrictions were put in place in an attempt to quell fresh outbreaks.

“There is a tail risk that the road to living with COVID is too slow, surging COVID cases fuels more protests and social unrest further weakens the economy are market concerns,” said Robert Subbaraman, Nomura’s Asia ex-Japan, chief economist.

“Things are very fluid. Protests could also be the catalyst that leads to a positive outcome in leading the government to set a clearer game plan on how the country is going to learn to live with COVID, setting a more transparent timetable, and accelerating China’s move to living with COVID.”

The dollar extended gains against the yuan, rising 0.87%.

The COVID rules and resulting protests are creating fears the economic hit for China will be greater than expected.

“Even if China is on a path to eventually move away from its zero-COVID approach, the low level of vaccination among the elderly means the exit is likely to be slow and possibly disorderly,” CBA analysts said on Monday. “The economic impacts are unlikely to be small.”

China’s case numbers have hit record highs, with nearly 40,000 new infections on Saturday.

Fears about Chinese economic growth also hit commodities in Asia trade.

US crude dipped 2.81% to USD 74.14 a barrel and Brent crude fell 2.57% to USD 81.48 per barrel, as the COVID protests in top importer China fuelled demand worries.

Yields on benchmark 10-year Treasury notes rose to 3.6628% from its US close of 3.702% on Friday. The two-year yield, which tracks traders’ expectations of Fed fund rates, touched 4.4463% compared with a US close of 4.479%.

The dollar dropped 0.3% against the yen to 138.64 after initially trading higher earlier in the day. It remains well off its high this year of 151.94 on Oct. 21.

The euro fell 0.5%, having gained 4.94% in a month, while the dollar index, which tracks the greenback against a basket of currencies of other major trading partners, was up at 106.49.

Gold was slightly lower. Spot gold was traded at USD 1750.49 per ounce.

(Reporting by Scott Murdoch in Sydney; Editing by Sam Holmes)

Philippines sees economy slowing, but ‘comparatively strong’ in 2023

MANILA, Nov 27 (Reuters) – Philippine economic growth may ease next year after a likely expansion of more than 7% this year as global risks linger, but it will remain resilient, a top official said on Sunday.

“We may slow down, given still elevated external headwinds & internal challenges, but the economy will remain comparatively strong in 2023,” Economic Planning Secretary Arsenio Balisacan said in a tweet.

The government is aiming for yearly gross domestic product growth of 6.5% to 8.0% between 2023 and 2028.

The economy would likely grow above the government’s 6.5%-7.5% growth target for 2022, Balisacan said on Nov. 10, following a faster-than-expected 7.6% annual expansion in the third quarter, underpinned by pent-up domestic demand.

That followed GDP growth rates of 7.5% in the second and 8.2% in the first quarter, boosted by the full reopening of the economy as the government continuously lifted COVID-19 restrictions, and despite soaring inflation.

The world’s largest investment banks expect global economic growth to slow further in 2023 following a year roiled by the Ukraine conflict and soaring inflation, which triggered one of the fastest monetary policy tightening cycles in recent times.

(Reporting by Enrico Dela Cruz; editing by David Evans)

Philippine leader hopes court will reconsider Manila power deal

MANILA, Nov 27 (Reuters) – Philippine President Ferdinand Marcos Jr. hopes the country’s Court of Appeals will reconsider a decision that raises the possibility of electricity rate hikes in the capital, the Office of the Press Secretary said in a statement on Sunday.

The court allowed South Premiere Power Corp., a unit of San Miguel Corp SMC.PS to suspend a power supply agreement with Manila Electric Company (Meralco) (MER)after the companies were prevented from raising tariffs by the regulator.

“We hope that the CA (Court of Appeals) will reconsider and include in their deliberations the extremely deleterious effect this will have on power prices for ordinary Filipinos,” Marcos was quoted as saying, describing the decision as “unfortunate”.

South Premiere and Meralco had sought to raise prices amid higher costs of coal, which the Energy Regulatory Commission rejected in September citing fixed prices set under power supply agreements.

Marcos, who began his six-year term in June, has promised lower electricity rates, which are among the highest in Asia. Higher electricity prices would put further pressure on Philippine inflation, which hit the fastest pace in nearly 14 years last month.

San Miguel, the Southeast Asian nation’s largest conglomerate and one of its major power producers, has said it needs “temporary relief” to allow it “to sustainably provide for the increasing power needs of our country while meeting our obligations to our various stakeholders”.

It told the Philippine Stock Exchange on Friday it had received a copy of the court’s resolution.

Meralco, the country’s biggest power distributor whose franchise covers metropolitan Manila and nearby provinces, said it was “reviewing the resolution in consultation with our counsel to determine the next steps”.

(Reporting by Enrico Dela Cruz;Editing by Elaine Hardcastle)

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