Morning Bid: China crisis brewing

Nov 28 (Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.

The Purchasing managers’ index (PMI) will be the economic driver for Asian markets this week, but the tone will be set by political tensions in China.

Thousands of people are taking to the streets in several cities across the country in unprecedented protests against the government’s COVID restrictions after a deadly house fire in Urumqi in the west of the country.

The spate of civil disobedience and clashes between protesters and police comes amid growing frustration over President Xi Jinping’s zero-covid-19 policy. China has reported new cases of COVID for four straight days.

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“Down with the Chinese Communist Party, down with Xi Jinping,” a crowd in Shanghai chanted early Sunday, according to witnesses and video posted on social media.

It is fair to say that this does not happen very often, and the world is watching with interest to see how Beijing deals with the alcohol problem.

According to the latest market, the rise of COVID and the global unrest are ending any hope that China is close to reopening its economy. It looks like the restrictions will be lifted soon, and growth will continue to struggle.

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Accordingly, PMI figures on Wednesday are expected to show that China’s factory activity and employment sector fell again in November, another sign that Beijing is maintaining its monetary policy stance.

If so, the yuan is expected to rebound, especially after the central bank said on Friday it would reduce the amount of money banks must hold as reserves, injecting about $70 billion of capital into the struggling economy.

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Three major factors that will provide guidance to the markets on Monday:

– Sales in Australia (October)

– Fed’s Williams speaks

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– ECB’s Lagarde speaks

Jamie McGeever reports in Orlando, Fla.; Edited by Mark Porter

Our Standards: Thomson Reuters Trust Principles.

The opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from discrimination.

Jamie McGeever

Thomson Reuters

Jamie McGeever has been a financial journalist since 1998, based in Brazil, Spain, New York, London, and now back in the US. Focus on finance, central banks, policy makers, and global markets – especially FX and fixed income. Follow me on Twitter: @ReutersJamie

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