MARKET WRAPS

Watch For:

EU money supply; ECB President Christine Lagarde appears at Committee on economic and monetary affairs; U.K. Financial Policy Committee meeting, PM Rishi Sunak delivers annual Lord Mayor's banquet speech; Germany Deutsche Bundesbank President Joachim Nagel speaks at Economic Council of Baden-Württemberg event, G7 Justice ministers meeting; trading updates from Siemens Healthineers, RWE

Opening Call:

European shares may fall at Monday's open. Asian stock benchmarks declined; the dollar strengthened; U.S. bond yields fell; oil and gold slumped

Equities:

Stocks could decline on Monday, as protests in China against Covid lockdowns stoke worries across asset classes.

U.S. stocks ended mixed in a shortened trading session Friday, with markets subdued following Thursday's Thanksgiving holiday.

Whether the market can continue rising will depend upon the next U.S. inflation report on Dec. 13 and the next Fed meeting on Dec. 13-14, said Frank Cappelleri, founder of research firm CappThesis.

"The big question is, is this the same type of rally we've seen fail before?" he said.

"The market just wants to keep going up," said wealth-management firm Aspiriant.

"It would be great if it could, but the fundamentals just don't seem there."

"The proof will be in the holiday pudding when we see what's happening with holiday spending," it said.

"If earnings are revised downward, we're expecting a downward move in the S&P 500," said Anna Rathbun, chief investment officer at CBIZ Investment Advisory Services, who thinks 2023 earnings estimates are currently too optimistic.

"Stocks are still expensive because the optimism premium is built into the estimates going out four quarters."

Read: Year-end rally? Bullish stock-market pattern set to collide with stagflation fears

Forex:

The dollar strengthened early Monday.

Several top-tier data releases are scheduled in the U.S. this week, including core PCE inflation data, ISM manufacturing survey, and non-farm payrolls, ANZ said.

"These are the last major data releases before the Fed meets, and they will thus be key for USD price action (although U.S. CPI data will be released as the Fed meets, complicating things)," ANZ said.

Bonds:

U.S. bond yields finished a holiday-shortened New York trading session little changed Friday, as investors continued to ponder recent economic data and the latest Federal Reserve meeting minutes.

"Looking at the curve, the 10s-2s yield curve spread remained near a multidecade low of nearly minus-80 basis points. That deep of an inversion suggests that the Fed's current policy and expected path of future policy are far too restrictive for the state of the economy and growth expectations, which will almost certainly end in a recession -- and potentially a severe one given the scope of the current inversions across the Treasury yield curve," Sevens Report Research said.

Energy:

Oil prices fell in Asia as protests over China's zero-Covid policy fueled worries over demand.

Markets will also likely focus on the upcoming meeting of OPEC and its allies, at which they are due to make a big call on oil production, which would bring greater clarity to the supply-demand oil outlook, IG said.

"Any indications of output talks on the table over the coming months may aid to lift sentiment for prices, but the greater driving force for prices could revolve around the Covid-19 situation in China, which may likely put a cap on upside until a clear peak in cases is seen," it said.

Morgan Stanley said it has a neutral-to-bullish crude-price outlook heading into next year.

"Our balances point to modest oversupply in coming months. Hence, we see Brent prices rangebound in the mid-80s to high-90s first," it said in an outlook for early 2023.

"However, the market will likely return to balance in 2Q23 and undersupply in 2H23. With limited supply buffer, we expect Brent to return to about $110/bbl by the middle of next year," it said.

Metals:

Gold prices declined early Monday, weighed by a slightly stronger USD.

The precious metal appears to be "trading roughly in the middle of what may be a newly established range between $1,730 and $1,780, potentially now awaiting the next catalyst ahead of the December Fed meeting," Oanda said.

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Base metals weakened, as demand concerns weighed on reports of widespread protests in China over the country's strict Covid policies.

Covid lockdowns across major Chinese cities are likely to lead to a further decline in mining profits, as they could lead to more delays in construction projects across the country, denting demand for base metals as a result, ANZ said.

Further signs of weak demand in metals could emerge this week when manufacturing PMI data for November is released, ANZ added.

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Chinese iron-ore futures rose, building on Friday's gains amid expectations of stronger demand.

Although current demand for steel appears weaker, steel making profitability has improved, Donghai Futures said.

Coupled with historically low inventory levels of the raw material and restocking needs heading into winter, these factors may offer support to iron ore prices, Donghai added.

TODAY'S TOP HEADLINES

Chinese Stocks Drop as Covid Protests Intensify, Cases Surge

Shares in mainland China and Hong Kong slid on Monday morning, after protests against the country's zero-tolerance approach to Covid-19 gathered steam.

Hong Kong's benchmark Hang Seng Index, which is dominated by Chinese stocks, was down more than 4% after the market opened. It recovered some ground in the morning but was still around 2% lower by midmorning. The Chinese domestic CSI 300 index was down 1.6%.

Oil Prices Face Fresh Volatility With New Russia Sanctions, OPEC Decision

OPEC and its allies are due to make a big call on oil production next week, a day before expanded sanctions are set to strike Russia's energy industry.

The potential impact of these moves is helping shroud the oil market in uncertainty at a time when coronavirus outbreaks are hammering demand in China.

Globalized Supply Chain Brings More-Turbulent Food Prices

For decades, globalization has increased the variety and reduced the cost of food. Now the pandemic, war in Ukraine and other global disruptions have shown how that complex supply chain can also result in more turbulent prices.

Food-price inflation hit multidecade highs this year in the U.S. and elsewhere, outpacing overall consumer prices. While food inflation has cooled in recent weeks, food prices globally are still 25% higher than before Covid-19 struck in early 2020, according to the United Nations Food Price Index.

Stocks Are on the Rise, but Earnings Could Drag Them Down Again

Markets have had a good run in recent weeks, but some investors expect unimpressive earnings to send stocks lower again.

U.S. stocks have mounted a turnaround lately amid expectations the Federal Reserve could slow the pace of its rate increases as soon as December. That has been a welcome change, since stocks have been under pressure throughout the year thanks to roaring inflation and the Fed's aggressive rate-raising campaign to try to curb the rising prices. The S&P 500 is down 16% this year, but up 13% from Oct. 12, its lowest close of 2022.

Adidas Top Executives Discussed Risk of Staff's 'Direct Exposure' to Kanye West Years Ago

Adidas AG's chief executive and senior leaders in Germany discussed as far back as four years ago the risk of continuing a relationship with Kanye West that they feared could blow up at any moment, according to people familiar with the matter and documents reviewed by The Wall Street Journal.

A 2018 presentation to members of the Adidas executive board, a group that included CEO Kasper Rorsted and the head of human resources, highlighted the risks for employees interacting with Mr. West and detailed mitigation strategies for the relationship with the Yeezy creator, including cutting ties with the rapper-turned-designer, documents show.

Iran's Top Paramilitary Commander Warns Protesters in Eastern Province Against Unrest

Iran's top paramilitary commander on Sunday visited a restive province in eastern Iran, where the military has attempted to violently suppress a two-month-old protest movement, to warn locals against further unrest.

Major General Hossein Salami, the commander in chief of the Islamic Revolutionary Guard Corps, traveled to Sistan-Baluchistan's capital of Zahedan, where he praised the Baloch minority who live there for their "chivalry, zeal, love, loyalty and sacrifice," according to the Fars news agency. At the same time, he threatened more crackdowns on protesters he alleged were being manipulated by foreign powers.

Most Power Is Restored in Kyiv as Russian Strikes Hit Southern Ukraine

MYKOLAIV, Ukraine-Ukrainian officials said Sunday that they had managed to restore most of the electricity to the capital city of Kyiv, even as Russian strikes hit cities across southern Ukraine and intense fighting continued in the country's eastern Donetsk region.

Even though parts of Ukraine's electricity grid have been hobbled by Russian strikes over the past few weeks, officials in the capital said that power, water and heat had been almost completely restored. Utility workers have been scrambling to restore power in recent days as temperatures drop and snow starts falling on the city of three million.

Bahamian Attorney General Defends Handling of FTX Collapse

The Bahamian attorney general defended the island nation's actions during the collapse of FTX Digital Markets Ltd. and urged patience while authorities investigate the embattled cryptocurrency exchange.

In a national address late Sunday, Ryan Pinder disputed recent statements made by FTX's new chief executive and lawyers in U.S. Bankruptcy Court questioning whether Bahamian regulators had the authority to take control of the local FTX subsidiary's assets around the time of its bankruptcy earlier this month. He said they did have the right to do so under local laws and did so to protect customers and creditors.

Write to singaporeeditors@dowjones.com

Expected Major Events for Monday

00:01/UK: Oct Zoopla House Price Index

07:00/NOR: Oct Retail Sales

08:00/SVK: Oct PPI

09:00/AUT: Nov Austria Manufacturing PMI

09:00/EU: Oct Monetary developments in the euro area (M3)

11:00/UK: Nov CBI Distributive Trades Survey

11:00/IRL: Oct Retail Sales Index

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This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

November 28, 2022 00:14 ET (05:14 GMT)