- Stocks in Asia fall as China’s never-ending Covid story continues and infections rise.
- Indices in Europe and the US forecast to open marginally higher after bruising last week.
- Concerns about recessions still loom for investors, while fresh strikes hit the UK.
- Tesla shares lose further ground in pre-market trading as Twitter controversy continues.
China’s Never-Ending Covid Story
As a chill settles on markets, there is not much sign of a sustained Santa rally instead there is still a lack of overall cheer with investors mulling more interest rate rises and the never-ending story of the pandemic.
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The winter wave of Covid crashing over China is proving unsettling with worries about an escalation of infections now outweighing hopes that the easing of restrictions would lead to a brighter outlook for the economy.
Chinese business confidence has fallen to its lowest since January 2013, according to data from World Economics, and as consumers desert streets and hunker down, while companies brace for mass absences, the immediate outlook remains bleak.
In Hong Kong, the Hang Seng lost early gains to trade 0.8% lower while the Nikkei fell around 1% and the yen rose, as speculation swirled that the Bank of Japan might start to tighten its loose monetary policy.
Recession Concerns
After fresh set backs on Wall Street on Friday, stocks are forecast to gain a little ground, but sentiment is still expected to be subdued. Concerns that the US will be dragged into recession, as the Federal Reserve tries to tame the wild horse of inflation are still front and centre.
In London, the internationally focused FTSE 100 is expected to open marginally higher after being smacked lower on Friday, but headwinds are still whipping around for the more domestically aligned FTSE 250 given the current difficulties facing the UK.
Another week of strike action from post and rail workers is set to cause more disruption for retailers and hospitality firms, in particular, in what is usually a crucial week for festive sales. The Brexit hangover is showing signs of intensifying with fresh unwelcome repercussions compounding the issues facing the NHS, as nurses and ambulance staff prepare to strike this week.
A new report from the Nuffield Trust has highlighted the slowdown in recruitment from Europe has made shortages of staff more acute while it cites trade barriers as one of the problems causing supply issues of vital medicines.
Tesla And Twitter Turbulence Continues
The Tesla Inc (NASDAQ:TSLA) and Twitter symbiosis continues, with shares in the electric vehicle maker continuing to slide while Twitter turbulence continues. Tesla shares lost another 1.2% in pre-market trading following a fall of 4.7% on Friday. Elon Musk’s latest ruse is a poll on the social platform asking users to assess whether he should stay or go as CEO.
Witnessing a chief executive making crucial business decisions based on the verdict of the court of public opinion is unnerving, particularly at a time when Tesla investors are craving a return to stability. Shares are now down by more than 62% year to date, not helped by Elon Musk offloading fresh chunks of holdings and his regular jaunts into controversy.
However, if he does decide to step down, that could inject Tesla shares with a temporary shot of optimism, amid hopes he might finally pay the carmaker the attention it needs at a time when it’s being shaken by expectations of falling demand in China, the world’s largest car market.
Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown
