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Markets are in tense mood on Tuesday as midterm election day arrives and financial markets start to react to the news that today is the biggest rise in coronavirus cases in six months.
Chinese stock markets gave back some of their recent gains during the morning session, and US futures are in the red while European stocks tread water.
New coronavirus cases surged in Guangzhou and other Chinese cities, official data today showed, with the global manufacturing hub becoming China’s latest COVID19 epicentre and testing the city’s ability to avoid a Shanghai-style lockdown.
Local lockdowns in China are now widespread. November economic data is not likely to show too much bounce, if any, from October the way this is going.
Nationwide, new locally transmitted infections climbed to 7,475 on Nov. 7, according to China’s health authority, up from 5,496 the day before and the highest since May 1. Guangzhou accounted for nearly a third of the new infections.
The sharp rebound will test China’s ability to keep its COVID measures surgical and targeted and challenge the expectations of investors that the world’s second-largest economy could soon reopen its borders or even back off from its zero-tolerance approach.
Guangzhou, capital of Guangdong province, reported 2,377 new local cases for Nov. 7, up from 1,971 Zhengzhou, capital of central Henan province and a major production base for Apple suppliers.
COVID-19 restrictions have temporarily impacted the primary iPhone 14 Pro and iPhone 14 Pro Max assembly facility located in Zhengzhou, China. The facility is currently operating at significantly reduced capacity.
The company said “As we have done throughout the COVID-19 pandemic, we are prioritizing the health and safety of the workers in our supply chain. We continue to see strong demand for iPhone 14 Pro and iPhone 14 Pro Max models. However, we now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated and customers will experience longer wait times to receive their new products.”
Nomura Bank has said that “The lockdown situation has continued to deteriorate quickly across the country over the past week, with our in-house China COVID lockdown index rising to 12.2% of China’s total GDP from 9.5%”.
The bank finishes with “We continue to believe that, while Beijing may fine-tune some of its COVID measures in coming weeks, those fine-tuning measures could be more than offset by local officials’ tightening of the zero-COVID strategy.”
