Revolt at Foxconn, layoffs at HP, Russian oil price cap – what's moving markets

© Reuters

By Geoffrey Smith
Investing.com — Violence erupts at the Zhengzhou iPhone assembly factory owned by Apple supplier Foxconn, over the extreme conditions imposed in the latest COVID lockdown. HP announces layoffs as the PC market slows further. There’s a glimmer of hope in Europe as closely watched business surveys suggest things stopped getting worse in November. The G7 is set to agree on a price cap for Russian oil. And weekly jobless claims numbers and the Michigan Consumer Sentiment survey round off the data calendar before the U.S. shuts down for the Thanksgiving holiday weekend. Here’s what you need to know in financial markets on Wednesday, 23rd November.
1. Violence breaks out at ‘iPhone City’
Violent protests broke out at the world’s largest iPhone assembly plant, owned by Apple (NASDAQ:) supplier Foxconn (TW:) (also known as Hon Hai Precision).
The plant has already been under COVID-19 restrictions for a month, placing an intolerable burden on its thousands of staff, trapped between the fear of catching the disease at the workplace and of losing their job if they refuse to comply with instructions. For the first time in recent history, reports also cited workers complaining about unpaid wages.
The report reads across badly to the rest of China’s manufacturing sector, given Foxconn’s reputation as a relatively efficient crisis manager during the pandemic and given the nationwide spread of COVID-19 cases in recent days.
The fell in response to concerns of similar developments elsewhere.
2. Pre-holiday U.S. data dump
The U.S. releases weekly data a day earlier than usual, due to the looming Thanksgiving Day holiday on Thursday.
Initial claims for jobless benefits are expected to have ticked up to 225,000 from 222,000 last week, albeit that’s still a level that suggests that those losing their jobs are still finding new employment relatively easily.
There are also orders data for October at 08:30 ET (13:30 GMT), while the survey for November and numbers for October follow at 10:00 ET (15:00 GMT).
3. Stocks set to open mixed; HP higher after announcing layoffs
U.S. stock markets are set to edge a little higher at the open but aren’t expected to make any major movements ahead of the holiday weekend, with most participants focused on making a quick getaway home.
By 06:30 ET (11:30 GMT), were up 26 points or 0.1%, while , and were up in parallel.
Stocks likely to be in focus later include HP (NYSE:), which was marked up 1.4% in premarket after the maker of laptops and PCs announced it will lay off 12% of its workforce over the next three years against the backdrop of a prolonged slump in demand. Dell also reported a 17% drop in revenue from PC and laptop sales and said it expects things to get worse before they get better.
Other stocks in the news include John Deere (NYSE:), which reported a 75% leap in profit in its , and English soccer club Manchester United (NYSE:), after the Glazer family that owns the chronically underperforming club said it will consider a potential sale. That came on the same day that the club terminated the contract of Cristiano Ronaldo for giving a scathingly critical interview.
4. European PMIs stabilize in November
Is that a glimmer of light at the end of the tunnel for Europe? S&P’s purchasing manager indices – a rough proxy for real-time changes in the dynamics of economic growth – surprisingly improved in November in the , and stopped getting worse in the
There was a notable improvement in activity, in particular, the first since Russia invaded Ukraine in February, as companies reported a marked easing in supply chain bottlenecks.
In the U.K., meanwhile, the restoration of orthodox fiscal policy appears to have eased fears about runaway inflation and sharply higher – although new orders to the private sector fell the most in over a year, promising a bleak winter ahead.
In the Eurozone and the U.K., the PMIs still remain deep in what usually signifies contractionary territory.
5. Oil slumps on China news, shrugs at Russia price cap; EIA inventories due
Crude oil prices fell again as the news out of China revived fears for the profile of demand from the world’s largest importer. Recent surveys have already suggested that the country’s refineries are exporting more due to their inability to sell products at home.
By 06:35 ET (11:35 GMT), prices were down 2.5% at $78.67 a barrel, while futures were down 3.1% at $85.64 a barrel.
The market is still shrugging at the G7’s attempts to nail down a price at which to cap Russian oil exports, a measure largely seen as unenforceable. The stigma attached to Russian crude means that Urals, its main export blend, is already trading at a $20 discount to Brent. As such, reports of a cap of around $70/bbl are unlikely to have any practical effect.
The U.S. government releases at 10:30 ET (15:30 GMT) as usual.