Foxconn riot, HP layoffs, Russian oil price cap

© Reuters

By Geoffrey Smith — Violence erupts at the Zhengzhou iPhone assembly factory, owned by Apple supplier Foxconn, due to the extreme conditions imposed in the latest COVID lockdown. HP announces layoffs as PC market slows further. There is a glimmer of hope in Europe as closely watched business surveys suggest things stopped getting worse in November. The G7 is ready to agree on a price cap for Russian oil. And weekly jobless claims figures and the Michigan Consumer Sentiment survey round out the data schedule before the US shuts down for the Thanksgiving holiday weekend. Here’s what you need to know in the financial markets on Wednesday, November 23.

1. Violence breaks out in ‘iPhone City’

Violent protests at the world’s largest iPhone assembly plant, owned by Apple supplier (NASDAQ:) Foxconn (TW:) (also known as Hon Hai Precision).

The plant has now been under COVID-19 restrictions for a month, placing an intolerable burden on its thousands of employees, caught between the fear of contracting the disease in the workplace and losing their job if they refuse to comply with the instructions. For the first time in recent history, the reports also cited workers complaining about unpaid wages.

The report reads poorly for 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 drop in response to concerns of similar developments elsewhere.

2. Pre-Holiday US Data Dump

The United States releases the weekly data a day earlier than usual, due to the Thanksgiving holiday coming up on Thursday.

Initial claims for jobless benefits are expected to have risen to 225,000 from 222,000 last week, though that is still a level that suggests those who lose their jobs still find new employment relatively easily.

There is also order data for October at 08:30 ET (13:30 GMT), while the November survey and October figures follow at 10:00 ET (15:00 GMT).

3. Actions prepared for mixed opening; HP rises after announcing layoffs

US stock markets are set to rally a bit at the open, but are not expected to make any major moves before the holiday weekend, with most participants focused on making a quick getaway home.

At 06:30 ET (11:30 GMT), they were up 26 points or 0.1%, while , and were up in parallel.

Stocks likely to be in the spotlight later include HP (NYSE:), which rose 1.4% premarket after the desktop and laptop maker announced it will cut its workforce for the next three years in the context of a prolonged fall 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 actions in the news include John Deere (NYSE:), which reported one in its , and English soccer club Manchester United (NYSE:), after the Glazer family, which owns the chronically underperforming club, said it I would consider a possible sale. That came on the same day that the club terminated Cristiano Ronaldo’s contract for giving a scathingly critical interview.

4. European PMIs stabilize in November

Is that a ray of light at the end of the tunnel for Europe? The S&P Purchasing Managers’ Indices, a proxy for real-time changes in economic growth dynamics, in November in , and stopped deteriorating in

There was activity, in particular, the first since Russia invaded Ukraine in February, as companies reported a marked decrease in supply chain bottlenecks.

Meanwhile, in the UK, the restoration of orthodox fiscal policy appears to have inflation and markedly 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 UK, PMIs are still deep in what usually means contractionary territory.

5. Oil Tumbles on China News, Shrugs off Russia Price Cap; Expiration of EIA inventories

Crude oil prices fell again as news from China revived fears over the demand profile of 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 domestically.

At 06:35 ET (1135 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 off attempts by the G7 to set a price at which to cap Russia’s oil exports, a move largely seen as unenforceable. The stigma attached to Russian crude means that Urals, its main export mix, is already trading at a $20 discount to Brent. As such, reports of a cap around $70/bbl are unlikely to have any practical effect.

The US government posts at 10:30 ET (15:30 GMT) as usual.

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