(Bloomberg) -- Shares were under downward pressure and the dollar climbed as markets opened Monday to news of growing unrest in China over Covid restrictions.
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Equities fell in Australia and Japan. US futures also dropped, with modest customer traffic and heavy discounting by American retailers on Black Friday adding to the downbeat tone.
The greenback benefited from haven demand and made some of its biggest early gains against the currencies of Australia and South Africa, both of which are exposed to trade with China.
The offshore yuan dropped. Stock futures for Hong Kong already pointed toward declines even before protests in China worsened over the weekend. A gauge of US-listed Chinese shares fell on Friday.
"The near-term clarity suggests we might see some derisking around Chinese markets," said Chris Weston, head of research at Pepperstone Group Ltd. "We are seeing some outflows of the offshore yuan, which I think is a pretty good indication of how Chinese markets may fare," he said, while adding that the outlook for China over the longer term remains relatively robust.
Oil fell as developments in China hurt appetite for risk and the outlook for demand, adding to stresses in an already-fragile global market. Gold inched lower.
Treasury yields held near recent lows. Moves were also muted in Australian and New Zealand government bond yields.
The downbeat mood emanating from China contrasts with the boost to sentiment in global markets last week after the Federal Reserve's Nov. 1-2 meeting minutes showed most officials backing slowing the pace of interest-rate hikes.
Since the Fed's latest meeting, investors have parsed a bevy of economic data that somewhat eased inflation concerns, further strengthening the case for smaller rate hikes.
The S&P 500 notched a weekly gain of 1.5% that took the index to the highest level since early September. The Nasdaq 100 also eked out a gain for the week.
All eyes will be on the US jobs report this week and on Fed Chair Jerome Powell and New York Fed President John Williams, who are among central bank officials scheduled to speak.
Amid the challenges in China, the nation's central bank on Friday cut the amount of cash lenders must hold in reserve for the second time this year, an escalation of support for an economy that's being weighed down by Covid curbs.
"The PBOC and fiscal policy as well have been in supportive mode in China for some time and we are still seeing that the domestic head winds in China are still significant," Katrina Ell, a senior economist at Moody's Analytics, said on Bloomberg Television. "Stabilization really from a domestic demand perspective remains elusive."
Key events this week:
Fed's John Williams speaks, Monday
Fed's James Bullard MarketWatch interview, Monday
ECB's Christine Lagarde addresses European Parliament committee, Monday
Euro area economic confidence, consumer confidence, Tuesday
US Conference Board consumer confidence, Tuesday
EIA crude oil inventory report, Wednesday
China PMI, Wednesday
Fed Chair Jerome Powell speech, Fed's Michelle Bowman Lisa Cook speak, Wednesday
Fed releases its Beige Book, Wednesday
US wholesale inventories, GDP, Wednesday
S&P Global PMIs, Thursday
US construction spending, consumer income, initial jobless claims, ISM Manufacturing, Thursday
Fed's Lorie Logan, Michelle Bowman, Michael Barr speak, Thursday
BOJ's Haruhiko Kuroda speaks, Thursday
US unemployment, nonfarm payrolls, Friday
Fed's Charles Evans speaks, Friday
ECB's Christine Lagarde speaks, Friday
Some of the main moves in markets:
S&P 500 futures fell 0.4% as of 9:07 a.m. Tokyo time.
Nasdaq 100 futures fell 0.5%
The Topix Index fell 0.1%
The S&P ASX Index fell 0.5%
Hang Seng Index futures fell 0.5%
The Bloomberg Dollar Spot Index rose 0.3%
The euro fell 0.2% to $1.0375
The Japanese yen was little changed at 139.29 per dollar
The offshore yuan fell 0.8% to 7.2551 per dollar
The Australian dollar fell 0.5% to $0.6714
Bitcoin fell 0.7% to $16,457.08
Ether fell 1.6% to $1,196.25
The yield on 10-year Treasuries advanced one basis point to 3.69%
Australia's 10-year yield advanced two basis points to 3.60%
West Texas Intermediate crude fell 0.2% to $76.12 a barrel
Spot gold fell 0.2% to $1,751.85 an ounce
This story was produced with the assistance of Bloomberg Automation.
--With assistance from Georgina Mckay.
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