Stocks point to lower open, crude down amid unrest in China

Wall Street is heading lower Monday as crude prices dip and widespread protests in China calling for Xi Jinping to step down over COVID-19 policies.

Wall Street is heading lower ahead of Monday’s opening bell amid widespread protests in China calling for Xi Jinping to step down and an end to one-party rule.

Futures for the Dow Jones industrials fell 0.5 per cent and the S&P slipped 0.7 per cent.

Crude prices neared a low point for the year partially due to unrest in China, and have fallen for three consecutive weeks. Crude prices are now negative for 2022 and, after soaring above US$120 in June, a barrel of benchmark U.S. crude can now be had for less than US$74 per barrel.

The upheaval in China is the greatest show of public dissent against the ruling Communist Party in decades. Protestors are railing against policies aimed at eradicating the coronavirus by isolating every case, a policy that may have contributed to the death toll in an apartment fire in Urumqi in the northwestern Xinjiang region.

“For investors, when it comes to China, trying to predict with any degree the reopening certainty that has no certainty, basis, or track record to go by is looking like a dangerous game in the context of the disquieting protests and the colossal challenge China’s leaders now have on their hands,” Stephen Innes of SPI Asset Management said in a commentary.

Rising numbers of COVID-19 cases could further disrupt manufacturing and transport, adding to headaches over supply chains and inflation.

Apple fell almost two per cent in premarket trading as the China manufacturing closures have hit the iPhone maker especially hard. Apple had been warning of shortages for its latest model, the iPhone 14, since early this month. Analysts now say those shortages could be even worse than previously thought.

Dan Ives of Wedbush Securities said Monday that disruptions in China could cut the number of available Apple’s iPhone 14 models between five per cent and 10 per cent this quarter, with some Apple stores seeing inventory shortages of up to 40 per cent.