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Iger returns to Disney, China COVID woes, FTX aftershocks - what's moving markets

Published 11/21/2022, 08:14 PM
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By Geoffrey Smith

Investing.com -- Walt Disney stock is selling like Taylor Swift tickets on the news that Bob Iger is to return to the CEO seat at the entertainment giant, as Bob Chapek's streaming vision unravels. Global markets have gloomier stuff on their minds, though, after China confirmed its first deaths from COVID-19 in months, casting doubt on its ability to reopen its economy this winter. European and Asian stocks headed lower, along with oil prices, and U.S. stocks are set to follow. Zoom Video will report earnings after the bell. And Bitcoin falls as more grisly details about FTX's bankruptcy continue to ooze out.

1. The return of the king

Walt Disney (NYSE:DIS) stock rose 9% in premarket on the news that Bob Iger, who grew the company’s value five-fold in his 15 years as CEO, is back.

Iger has been given a two-year contract with “a mandate from the Board to set the strategic direction for renewed growth.”

The Mouse House has given up on Iger's successor, Bob Chapek, having seen the company’s stock lose nearly half its value in the last 12 months due to the mounting costs of fighting Netflix (NASDAQ:NFLX) for supremacy in the streaming market.

Chapek has had his fair share of bad luck during his three-year stint, as the pandemic wrought havoc with its theme park and cruise businesses – as well as its movie production and distribution. He’s also been caught in the middle of a culture war between Governor Ron DeSantis and the artistic community over Florida’s so-called “don’t say gay” law.

2. Crypto keeps wobbling as FTX fiasco plays out

Cryptocurrencies remained under pressure as more investors headed for the exit, dismayed at the stream of news flow around the collapse of crypto exchange FTX.

Bitcoin fell briefly below the $16,000 level but held above the two-year low that it posted two weeks ago as FTX crumbled. By 06:50 ET (11:50 GMT), it was down 2.7% at $16,064.

Reports over the weekend suggested that FTX owes its 50 largest unsecured creditors over $3 billion. Various social media accounts tracking blockchain data noted on Monday that the ‘hacker’ (suspected by many to be a company insider) who drained digital currency from the exchange after it filed for bankruptcy protection is still moving those assets around – a constant reminder of the company’s inability (or unwillingness) to safeguard customers’ assets.

The market’s focus has begun to shift in recent days away from FTX itself and on to Digital Currency Group, whose Grayscale Bitcoin Trust (BTC) (OTC:GBTC) has come under pressure after Genesis Trading, another of its affiliates, suspended client withdrawals.

3. Stocks set to open lower on China news; Zoom earnings eyed

U.S. stocks are set to open lower later, under pressure from the weekend news out of China and still weighed on by the reluctance of the Federal Reserve to send any signal that could be construed as a pivot to a gentler monetary policy.

A series of Fed officials last week went out of their way to stress that, while an interest rate hike of 50 basis points at its next meeting would be a smaller step than those seen at the last four meetings, it’s still a hike and there may be a few more of them yet before the central bank is done.

By 06:30 ET, Dow Jones futures were down 83 points, or 0.2%, while S&P 500 futures were down 0.5%, and Nasdaq 100 futures were down 0.8%.

Aside from Disney, the spotlight later will fall on Zoom Video Communications (NASDAQ:ZM), which reports third quarter earnings after the closing bell. Also in focus will be Taiwan Semiconductor Manufacturing (NYSE:TSM), after reports of a cryptic meeting between its CEO and Chinese President Xi Jinping in Thailand at the weekend.

4. China reports COVID deaths in Beijing as outbreaks spread

China reported its first deaths from COVID-19 in several months, including three in Beijing, while nationwide case numbers surged past their April highs and cast doubt over the authorities’ ability to meaningfully relax the country’s Zero-COVID strategy.

Outbreaks are ongoing in both Beijing and Shanghai, with localized lockdowns once again in force.

Bloomberg reported that Shijiazhuang -- a city of some 11 million people about 186 miles (300 kilometers) from Beijing – has suspended schools and universities and asked residents to stay at home for five days. The significance of that is that Shijiazhuang was thought to be a test case for scrapping all virus restrictions.

The health news overshadowed the central bank’s decision to keep its Loan Prime Rate unchanged.

5. Oil drops on China news; Iran protests gather strength

Crude oil prices fell back below $80 a barrel, under the combined weight of the Chinese news and expectations of a drop in demand against a backdrop of reports that both Europe and China have recently been buying more oil than they need.

China’s domestic demand is likely to fall sharply if the current wave of COVID outbreaks forces a return to more restrictive mobility measures, while European buyers have reportedly been stockpiling ahead of December 5th, when a ban on Russian oil and product imports is due to take effect.

U.S. crude futures were down 0.2% at $79.98 a barrel, while Brent futures were down 0.3% at $87.38 a barrel.

As oil prices fall, protests against the ruling authorities in Iran continue to gain strength. The protesters got surprise encouragement from the captain of the national soccer team earlier Monday, only hours before its opening World Cup game against England. Ehsan Hajsafi opened a press conference by saying, with no prompting, that the protesters “should know we support them.”

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