Early Morning Call: China protests see indices and commodities fall, while USD gains

Equity market overview

Protests broke out across China over the weekend, as people expressed their frustration over the country's zero-Covid policy. We don't know the exact magnitude of the protests but they are large enough to spook the markets.

In Hong Kong, the Hang Seng was down 4% at the open, and led losses in the region.

In Europe the FTSE 100, DAX and CAC 40 are set to open lower.

Elsewhere on the equity market, Airbus is likely to attract investor attention. On Saturday, Reuters revealed that Airbus could be announcing further delays to planned delivery dates of some medium haul planes due in 2023.

According to Reuters sources, the aircraft maker is already racing to meet its 2022 delivery targets as it struggles with supply chain and labour problems. A spokesperson for Airbus said it had no comment to give.

Commodities

Equity markets are not the only ones affected.

WTI set a new 2022 low, while Brent is trading at its lowest level since mid-January, as investors fear that the China unrest and the potential growth implications for the world’s second largest economy could weigh on demand for oil and commodities.

Base metals are also falling this morning. Copper fell briefly to a one-month low.

Forex

On the currency market, the Australian dollar is down against all major currencies this morning, another direct consequence of the China protests. China is Australia’s largest trading partner.

Also in Australia, retail sales unexpectedly fell by 0.2% in October month-on-month (MoM). Economists were expecting a rise of 0.5%.

The US dollar is rising this morning, as investors are looking for safety. The event currency traders are gearing up for is the release of non-farm payrolls (NFPs) on Friday. Early forecasts point to 200,000 job creations. The unemployment rate is seen rising to 3.8%, and average hourly earnings are expected to rise by 0.3% MoM.