A choppy start

It’s been quite a choppy start to the trading week, with much of the focus on China where Covid relaxation measures and property market support have brought some relief.

Unfortunately, both come at a time of record Covid infections in major cities including Beijing and Guangzhou. And those relaxation measures that were announced are not ambitious enough to make any difference in those cities seeing rising cases which means activity is going to weaken.

There is hope that China could further relax its zero-Covid policy next spring but for now, mass testing, heavy restrictions, and lockdowns are here to stay, despite growing opposition and fatigue. Those hoping that this initial relaxation phase would be more substantial were always setting themselves up for disappointment.

Property stocks in China and Hong Kong were given a big lift at the start of the week as Beijing unveiled its 16-point plan to support the industry. Having almost brought the industry to its knees as part of its reform efforts, Beijing is attempting to build it back up but as it’s already finding, the former is much easier to do than the latter.

Confidence is shattered and it will take time, effort, and patience to restore it. Now it’s a question of how much these measures will undermine Beijing’s initial reform measures and whether they’ll even succeed in reinvigorating the industry. Efforts until now have been like pushing on a piece of string.

Bad timing

Bitcoin waited patiently for this moment, forming a base around $20,000 in anticipation of inflation falling and the Fed narrative becoming much less hawkish. Unfortunately, that moment coincided with the spectacular collapse of FTX which has sent shockwaves through the industry and hammered crypto prices. Rather than taking off, bitcoin has plummeted to levels not seen in two years and further pain may lie ahead. There’s now enormous uncertainty in the space which could hold it back in the near term and weigh on prices.

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/

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