Oil prices fall as China faces Covid concerns, Goldman Sachs cuts forecast
Oil prices fell nearly a dollar as China’s Covid concerns grew, with the country seeing the first recorded virus-related deaths since May this year.
Brent futures lost less than a dollar, or 0.9%, to settle at $86.83 a barrel and United States West Texas Intermediate futures fell 1.09% to $79.21 a barrel.
Goldman Sachs cut its forecast for Brent oil by $10 to $100 a barrel for the fourth quarter of 2022, citing sluggish Chinese demand with growing concerns over Covid and insufficient details of the Group of 7 nations’ latest price cap on Russian oil.
“We believe the market has a right to worry about fundamentals going forward,” economists led by Jeffrey Currie said in the note, adding that the potential for further shutdowns in China equals the latest production cut by the OPEC+.
— Lee Ying Shan
Hong Kong movers: Reopening and tech stocks fall as China reports Covid-related deaths
Japanese trading houses rise as Berkshire Hathaway reportedly increases stake
Shares of some Japanese trading houses rose at the start of the Asian session, despite declines in markets in the region, after billionaire Warren Buffett’s Berkshire Hathaway increased its stake in the companies, according to individual regulatory filings.
Berkshire increased its stake by more than a percentage point in Mitsubishi, Mitsui & Co., Itochu, Marubeni and Sumitomo hold more than 6% in each of the companies, according to filings.
Japan-listed shares of Mitsubishi rose 1.89% during the morning session, Marubeni rose 2.12% and Sumitomo rose more than 1%. Itochu also rose 0.84% and Mitsui rose 0.16%.
It comes days after Berkshire Hathaway revealed it had increased its holdings of Taiwan Semiconductor Manufacturing Company’s U.S. certificates of deposit, sending Taiwan-listed shares up more than 10% in the Asia session.
China keeps prime lending rates unchanged as expected
China left its benchmark lending rate unchanged for a third consecutive month, according to an announcement from the People’s Bank of China.
The one-year loan prime rate is stable at 3.65% and the five-year rate is also suspended at 4.3%, the notice said.
South Korea saw its exports fall further in the first 20 days of November
South Korea’s exports for the first 20 days of November fell 16.7% on an annualized basis as demand from China lagged, according to data from the customs agency.
The fall in exports is a steep decline from the 5.5% plunge seen in October from the same period a year ago.
Imports also fell 5.5% in the first 20 days of November, leading to a slight improvement in the trade deficit — $4.4 billion for the period, compared to a deficit of $4.9 billion. dollars recorded in October.
The country has recorded a total of $40 billion in trade deficit since the start of the year, according to statistics from the agency.
CNBC Pro: Morgan Stanley’s Mike Wilson Predicts S&P 500 Bottom, Calls It ‘Tremendous Buying Opportunity’
Morgan Stanley’s chief U.S. equity strategist, Mike Wilson, says we are in the “final stages” of the bear market, but the situation will remain difficult for some time to come.
It predicts when – and at what level – the S&P 500 will reach a “new low”.
CNBC Pro subscribers can learn more here.
China expected to keep benchmark lending rates steady, Reuters poll shows
China’s central bank is expected to maintain its prime rates on one-year and five-year loans, according to analysts polled by Reuters.
The one-year rate is currently 3.65% and the five-year LPR is 4.3%.
The People’s Bank of China last cut both rates in August.
The offshore Chinese yuan was weaker at 7.1376 against the US dollar ahead of the move early Monday.
CNBC Pro: Strategist Says Chinese Tech Stocks Like Alibaba Are “Deeply Undervalued”
The 30% decline in the value of Chinese big tech stocks, such as Ali Babamade them “incredibly cheap”, according to investment bank China Renaissance.
Its head of equities, Andrew Maynard, believes not only that the stock market appears to have bottomed, but also that investors could miss a rally if they remain underweight China.
“Without a shadow of a doubt, being underweight in China is going to cost you dearly in the future,” Maynard said.
CNBC Pro subscribers can learn more here.
Markets are looking for more clues on Fed hikes and the economy in the week ahead
Investors could be a little more cautious in the coming week as stocks look to head for calm trading and bond market warnings of recession grow louder.
The Thanksgiving holiday Thursday should mean markets are likely to be quiet Wednesday and Friday. Merchants will monitor Black Friday holiday shopping reports for consumer feedback.
“This really is a week where data addiction is the key word,” said Julian Emanuel, senior managing director of Evercore ISI. “The bias [for stocks] is higher unless the data continues to deteriorate and the Fed remains on its hawkish bias…which has clearly strengthened over the past 48 hours.”
Check out our full deep dive on what to expect in the week ahead here.
—Patti Domm, Tanaya Macheel