NASDAQ Composite Futures Tumble on China COVID Concerns; Apple Under Pressure

Nasdaq Composite index futures are down in the pre-market session after gapping lower on the opening in response to protests in major Chinese cities against the country’s strict zero-COVID policy. The upheaval is reigniting concerns about economic growth in the world’s second largest economy. Meanwhile, shares of Apple are under pressure on a report of disruption in China production.

At 12:30 GMT, Nasdaq Composite Index futures are trading 11705.00, down 77.75 or -0.66%. On Friday, the Invesco QQQ Trust ETF (QQQ) settled at $286.83, down $1.99 or -0.69%. The drop in futures is likely to put pressure on the ETF after the cash market opening.

China COVID-19 Protests Spread to Major Cities

Protests against China’s strict zero-COVID policy and restrictions on freedoms have spread to at least a dozen cities around the world in a show of solidarity with rare displays of defiance in China over the weekend, Reuters reported.

The protests on the mainland were triggered by a deadly fire in China’s Xinjiang region last week that killed 10 people who became trapped in their apartments, in disaster blamed in part on lockdown measures.

The strict policy has kept China’s death much lower than many other countries but it has come at a cost of long spells of confinement at home for many millions and damage to the world’s second-biggest economy.

Although there were no signs of new protests in Beijing or Shanghai on Monday, the curbs so far have led to concerns over China’s economic growth and its trickle-down effect on global companies, Reuters wrote.

Apple Inc Predicts iPhone Pro Production Shortfall

The trickle-down effect on global companies is already hitting Apple Inc. Shares of the communications giant are already down nearly 2% in the premarket following a Bloomberg report that unrest at the company’s biggest supplier could result in 6 million fewer iPhone Pro units for the year.

Foxconn’s flagship iPhone plant in China is set to see a further reduction in November shipments after the latest bout of worker unrest, a source with direct knowledge of the matter told Reuters.

The world’s largest Apple iPhone factory has been grabbling with strict COVID-19 restrictions that have fueled discontent among workers and disrupted production ahead of Christmas and January’s Lunar New Year holiday, as many workers were either put into isolation or fled the plant.

Daily Forecast

The unrest in China triggered an early sell-off in the technology-heavy Nasdaq Composite Index as investors moved into safe-haven assets like U.S. Treasury bonds.

But with no signs of new protests in Beijing or Shanghai on Monday, prices are starting to claw back earlier losses. However, prices could resume their slide later in the day if the protests escalate.

On the bullish side, if the protests subside then look for the Nasdaq Composite Index to turn higher for the session as traders shift their focus to the possibility of a slowdown in the size of future Federal Reserve rate hikes.

The Nasdaq was lifted last week in a move that should carryover this week by comments from Federal Reserve officials signaling that the central bank would step down its aggressive rate hike path as inflation cools. Minutes from the Fed’s November meeting confirmed the likely shift in policy.