When China abruptly re-opened its borders on Jan. 9, it threatens the world’s health and safety. The country is suffering from an unexplainable rise in daily infection rates and mortality.
The mortality rate in China hurts its workforce. People who are ill from the virus are going to work. Those who are healthy are staying at home. The virus will need to reach its peak and fall before the country returns to normal. This has an impact on energy demand.
Investors should look out for the risk of the energy sector pulling back. The XLE ETF might fall as oil prices fall.
Copper prices might weaken as construction activity slows. Freeport-McMoRan (FCX) could fall, creating a better buying price in the weeks ahead. Iron ore supplier Cleveland-Cliffs (CLF) is a more attractive buy if the stock price pulls back.
In the U.S., XBB, a Covid variant that evades the immune system, is spreading. If this increases sick days taken by workers, it will disrupt output. XBB is already the dominant variant. The country will need this strain to peak and fall through the seasonal flu period. For now, it has not shown up as a worry for the economy.
