Market Round-Up

Three years after the first known coronavirus case emerged in the Chinese city of Wuhan, President Xi, and his leadership team issued new testing and travel guidelines which lifted the government’s hard-line containment policy of zero-COVID following mass protests around the country.

China has since experienced an explosion in COVID-19 cases with reports that Chinese officials have estimated in closed-door meetings that around 250m people, or 18% of the population, were infected in the first 20 days of December alone. The figures contrasted data published by the National Health Commission, which reported only 62,592 symptomatic COVID-19 cases over the same period. As a result, Chinese hospitals have been hit by a flood of mostly elderly patients, crematoriums are struggling with surging demand and many pharmacies have restricted medication supplies.

Via state media, Xi declared victory over the pandemic, changing the definition of a COVID-19 death, and officially reporting only eight deaths since the reopening. China has also stopped recording asymptomatic COVID-19 cases which previously contributed to a large majority of official figures. The World Health Organisation pushed Beijing to improve data transparency including case counts, disease severity and other health statistics with international travel by Chinese travellers forecast to jump from 5% of 2019 levels to 50% by the summer.

Despite the loosening of COVID-19 restrictions, China’s manufacturing data contracted sharply in December for the third successive month. According to China’s National Bureau of Statistics, the Purchasing Managers’ Index (PMI) came in at 47 points, down from 48 in November and comfortably below the 50-point mark separating growth from contraction. Similar trends have been experienced within the Eurozone, with the manufacturing sector continuing to shrink, however not as precariously. Final survey results from S&P Global confirmed the PMI at 47.8 points, up from 47.1 in November, thus achieving a three-month high.

Year-on-year UK food price increases reached a record 13.3% in December, up from 12.4% in the previous month. The British Retail Consortium (BRC), whose records began in 2005, reported higher prices for animal feed, fertiliser, and energy as the main contributors to price increases. These figures suggest further increases in the rate of UK food inflation, due to be reported by the Office of National Statistics (ONS) later this month, having previously reported a 16.6% rate in November, a 45-year high.

The BRC also reported that inflation in non-food stores, including fashion and homeware, slowed in December to 4.4%, down from the previous rate of 4.8%. Overall price inflation across retail edged down from a record 7.4% to 7.3% in December, suggesting an extension of the cost-of-living crisis with a continued squeeze on households in 2023.

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