Shares fall as Chinese language Covid protests dampen market sentiment

Shares fell on Monday as social unrest over China’s ongoing Covid restrictions weighed on markets and pushed oil prices lower – after Wall Street posted gains during the shortened Thanksgiving holiday week.

The Dow Jones Industrial Average fell 160 points, or 0.5%. The S&P 500 and Nasdaq Composite up 0.6% and 0.4%, respectively.

Demonstrations erupted in mainland China over the weekend as people vented their frustration at Beijing’s zero-Covid policy. Local governments tightened Covid controls as cases rose, although earlier this month Beijing adjusted some guidelines that suggested the world’s second-largest economy was on track to reopen.

The developments echoed in global markets. with oil futures hovering around fresh 2022 lows around demand concerns.

Shares in companies with large manufacturing facilities in the country were under pressure. Apple slipped 1.5% after Bloomberg reported that unrest at a factory in China could mean 6 million fewer iPhone Pro units for the year.

“You can’t rewire the supply chain overnight,” said Mohamed El-Erian, chief economic advisor at Allianz. “So what does this mean for these companies? It means insecurity of supply.”

The moves come after all three major US indices closed higher last week, even with the reduced trading session due to the Thanksgiving holiday.

Stocks were boosted during the week by comments from Federal Reserve officials signaling that the central bank would reverse its aggressive rate-hiking trajectory if inflation cools. Minutes from the Fed’s November meeting confirmed the likely course change.

Investors will be watching for more earnings reports this week and a slew of economic releases that will provide more information on the state of the consumer and the US economy. Personal consumption data and the November jobs report will also be released.

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