Morning auction: wild oil ride in the middle of China and crypto woe

A preview of the day ahead in US and global markets by Mike Dolan.

The oil turmoil, China’s COVID crisis, and unraveling cryptocurrencies make for uncomfortable reading for investors beginning to analyze what looks like a recession year ahead.

Rising interest rates and slowing economies dominate most of the outlook for 2023, including Tuesday’s latest from the Organization for Economic Co-operation and Development.

Although it expects the global economy as a whole to circumvent outright recession, the Paris-based OECD said it expects global growth to slow to 2.2% l next year compared to 3.1% in 2022 – with the UK and German economies likely to contract in 2023.

Underscoring the sluggishness of growth, China’s battle against COVID and its growing drags has only escalated. Beijing has closed parks, malls and museums while more Chinese cities have resumed mass testing for COVID-19 as the country reported new infections near April’s peaks.

Although Hong Kong stocks suffered another outsized hit, downbeat global markets were more mixed on Tuesday as lower oil prices – weighed down by China’s woes and global recession fears – took a turn for the worse. roller coaster in the last 24 hours.

Brent crude plunged more than 5% to a 10-month low of $82 a barrel at one point late Monday as OPEC considered raising output. But Saudi denials have seen it regain all those losses since and it hovered around $88 today.

The US dollar also gave up some of Monday’s strong gains. San Francisco Federal Reserve Chair Mary Daly sounded a more measured note on Fed tightening, saying Monday that the real impact of interest rate hikes by the U.S. central bank is likely greater than what that its short-term rate target implies.

The pain in the crypto world has continued, with many investors fearing that the fallout from the collapse of the FTX exchange has only just begun.

Bitcoin – which is now down almost 80% over the past year – fell to a two-year low of $15,481 on Monday night. Analysts estimate that over 55% of all money ever invested in the leading cryptocurrency is now underwater.

Investigations, recriminations and lawsuits in the crypto sector have continued. Cryptocurrency lender Genesis said on Monday it has no immediate plans to file for bankruptcy, days after the failure of FTX forced it to halt client redemptions.

And another worrying development for anyone involved in the region has been the increase in lawsuits against the sponsors and advertisers of the FTX failure – a blow to many celebrities, sports teams and corporate advertisers who get into cryptography.

The Golden State Warriors were sued Monday by an FTX client who accused the defending National Basketball Association champions of fraudulently promoting the now bankrupt cryptocurrency exchange. And Bloomberg News reporters American football star Tom Brady were being questioned by Texas regulators.

In business news, Baidu’s third-quarter revenue beat estimates as the Chinese search engine giant benefited from a recovery in online advertising sales and growth in its cloud and mobile business. ‘artificial intelligence.

Key developments that could guide US markets later on Tuesday:

*Philadelphia Federal Reserve Non-Manufacturing Business Survey November, Richmond Fed Business Survey November, Eurozone Consumer Confidence November

* Cleveland Federal Reserve Chair Loretta Mester, St. Louis Fed Chair James Bullard and Kansas City Fed Chief Esther George all speak.

* Profits of American companies: Analog Devices, HP, Dollar Tree, Autodesk

* US Treasury sells 7-year notes and 2-year floating rate notes

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By Mike Dolan, editing by Alexandra Hudson [email protected]. Twitter: @ReutersMikeD

Our standards: The Thomson Reuters Trust Principles.

The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and non-partisanship by principles of trust.


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