Chinese protesters over the weekend took to the streets against the strict anti-COVID policy. In response, Oil prices fell sharply, and the US dollar rose as fears of a Chinese economic slowdown drummed up safe-haven demand.
Chinese protests leading the markets
Protest rallies are so rare in China, however, this time it was widespread, and across the country. The government ruled the restrictions against Covid-19, while infections hit a fifth daily record. People are tired of strict policies and seeking more freedom, even asking the free travel without Covid-test, which has been abandoned for a long time in almost all countries.
While the last weeks we already had weak economic signs from China, these protests weighing on economic activities can increase and affect the overall market sentiment. We are talking about China, the second-largest global economy, the largest global factory, and a major export market for European and US companies.
In response, the stock markets traded lower, Oil prices fell and Safe havens got more demand. In the Asian season, Nikkei 225, Hang Seng, and Shanghai lost 0.42%, 1/57%, and 0.75% respectively. European season also started with these negative news and sentiment, while in Europe we have more reason to be disappointed. In October, inflation in the Eurozone soared to 10.6%, more than five times the European Central Bank’s 2% target, therefore, with mentioned news, seeing red color should not be a surprise. European leading indices and the US futures traded 0.7% lower on average in the first trading hours.
Later today, ECB President Christine Lagarde will give a European Parliament speech. Before Wednesday’s release of Eurozone inflation data ECB governor’s speech will be very important to watch!