October 10th 2024, 7:27:12 am
(about a few seconds ago)
End of China Covid-Zero brings pain to markets
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Global stock markets did not enjoy an end-of-year rally as China forego its strict Covid policy following social unrest. S&P 500 and Nasdaq lost 1.0% and 3.17% respectively and Canada’s S&P/TSX was little changed in the past five days. The US markets are more than 20% lower than their all-time highs at the end of 2021.
While the rest of the world passed the massive wave of Covid cases and learned to live with Covid, China was strongly sticking to its strict restrictions which led to violent protests in the past weeks. The authorities pivoted their policies and lifted all the restrictions, leading to over a million Covid cases a day. In the short-term, there will be a pain but China passing the Covid hurdle will benefit the world economy and lower the risk of a deep global recession in 2023.
For now, different asset classes are affected. Bonds still slump on higher rates and hawkish central banks, equities are suffering the risk of recession, and commodities including oil continue to trend lower on weaker demand coming from China. WTI crude oil prices are trading below 80 a barrel.
The Crypto market continues to be the hardest hit with the latest round of bankruptcies from once-considered stallion exchanges like FTX.