Weekend news and economic data risks for the open

Reuters reports that Shanghai is tightening its already strict COVID-19 lockdown in a fresh push to eliminate infections outside quarantined areas of China’s biggest city by late this month.

''Curbs will likely vary across the city’s 16 districts as some have already hit the target, but the people said movement curbs will generally remain until the end of May due to fears of a rebound, despite recently falling case numbers in the country’s worst coronavirus outbreak.''

''Shanghai is reporting thousands of cases a day, the vast majority in sealed-off areas such as central quarantine facilities, premises under “closed loop” management and housing where residents are barred from leaving their front doors.''

The mood in global markets has been soured surrounding the situation and is compounding the drag on risk appetite with global investors dumping stocks. Chinese tech stocks that are heavily exposed to domestic consumer activity have been among the hardest hit, with Alibaba tumbling more than 7 per cent and Tencent falling more than 5 per cent. This has been feeding its way through to Wall Street and forex, supporting the US dollar higher. 

Chinese trade data coming up 

Meanwhile, Chinese economic data is front and centre also. Monthly surveys released recently showed sentiment among manufacturing and services businesses have fallen in April to the lowest since the initial shock of the pandemic in February 2020. The Caixin services PMI  was the latest release, with a drop to 36.2 in April. That’s far below the 50 line that indicates contraction or expansion. Other data depict a similarly broad impact from Covid restrictions in China and at the start of the week, China's trade data is released. 

''April is likely to have been under pressure with most provinces under some form of restrictions and Shanghai in a full month of lockdown,'' analysts at TD Securities said. ''We expect further slowing in exports growth and weakness in imports. A soft trade outturn will add more pressure for follow-through by officials following their recent pledges on policy stimulus to support the economy.''

G7 sanction on Russia

Meanwhile, the ''US announced a slate of new sanctions against Russia on Sunday, cutting off Kremlin-controlled media outlets from American advertisers and prohibiting the country from using US-provided management and accounting consulting services,'' CNN reported. 

President Joe Biden and the leaders of the G7 met virtually with Ukrainian President Volodymyr Zelensky on Sunday which concluded with an announcement that included new export controls against the Russian industrial sector and roughly 2,600 visa restrictions on Russian and Belarusian officials, as well as the first sanctions against executives of Gazprombank, the institution through which most of Europe buys Russian gas.

"Preventing Russia from accessing the United States' valuable professional services increases the pressure on the Kremlin and cuts off its ability to evade sanctions imposed by the United States and our partners," US Treasury Secretary Janet Yellen said in a statement. "We are also targeting Putin's ability to generate revenue that enables his aggression, as well as entities and their leaders who support his destructive actions."

G7 Leaders’ Statement “First, we commit to phase out our dependency on Russian energy, including by phasing out or banning the import of Russian oil. We will ensure that we do so in a timely and orderly fashion…”