December 3, 2022
oil prices rising

On Monday, global stocks and oil prices fell because of a rise in COVID-19 cases and new deaths in China. This caused the world’s second-largest economy to be put back in place with lockdowns, which made people worry about the effect on the economy.

On Monday, residents of Beijing’s most populated district were told to stay home because the number of COVID cases in the city was going up. At least one district in Guangzhou was locked down for five days.

“It looked like zero COVID was going in the right direction, and everyone was happy,” said Thomas Hayes, chairman of Great Hill Capital in New York. “But the Chinese government is taking strong action, and in the short term, there will be fits and starts.”

MSCI’s broadest measure of world stocks went down by 0.92 percent, but European stocks stayed the same. On Wall Street, all three major indexes were going down. Technology, energy, and consumer discretionary stocks were selling off the most.

The Dow Jones Industrial Average fell 0.2% to 33,646.88, the S&P 500 fell 0.58 % to 3,942.36 and the Nasdaq Composite fell 1.16 % to 11,017.01.

Oil prices hit their lowest level since early January because people were worried that China would use less fuel because of the COVID-19 lockdowns and because there were reports that Saudi Arabia and other OPEC members were talking about a possible increase in output.

Brent crude futures for January fell 5.32 percent to $75.82 a barrel, while U.S. West Texas Intermediate (WTI) crude futures for December fell 5.19 percent to $83.07.

“The supply and demand of oil is always a factor,” said Cliff Hodge, chief investment officer at Cornerstone Wealth in Charlotte, North Carolina. “Right now, the market wants to know more about the demand side.”

“Usually, when there is a slowdown or global recession, oil demand will drop sharply,” Hodge said. “This year, we think China will make things worse.”

The U.S. dollar went up against most major currencies, making up for recent losses. This was because traders avoided riskier currencies because they were worried about how the COVID curbs in China would affect the global economy. At $1.0234, the dollar index went up 0.926%, while the euro went down 0.870%.

Longer duration After data showed that the U.S. economy was slowing, U.S. Treasury yields went down a little at the start of a short week because of Thanksgiving. The yield on 10-year notes fell to 3.8119%, and the yield on 30-year Treasury bonds dropped to 3.8961%.

As the dollar continued to rise, gold prices fell to their lowest level in more than a week. At the same time, the market turned its attention to the minutes from the November meeting of the U.S. Federal Reserve, which are due out this week. Spot gold fell 0.8% to $1,735.89 an ounce, and U.S. gold futures fell 0.9% to $1,736.10 an ounce.

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