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China cuts COVID-19 quarantine time in half, Shanghai Disney to reopen

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Yahoo Finance Live anchors discuss stock futures as China cuts the quarantine time for its COVID-19 policy in half.

Video transcript

- All right. Here are three things you need to know right now.

Stocks are getting a boost this morning after China announced it is cutting its strict COVID quarantine policy, trying to reduce the time new arrivals have to spend in isolation by half. That's a big shift in the country's zero-COVID policy, and good news for markets here, at least in the premarket, and good news for companies.

I look at Nike's earnings last night. We'll talk about that in a second. But again, a company very exposed to China. They called out-- they had a lot of problems in China the most recent quarter because of these lockdowns.

I look at Disney a couple of weeks ago, when they reported earnings. Shanghai Disney's supposed to open back up on Thursday, I believe. And that was supposed to be a big profit hit this quarter. So to get these easing restrictions, you understand why futures are, in fact, up.

- Oh, yeah. Disney shares moving higher premarket on that as well. And then additionally, you think about what this means more broadly for some of the other experience parts of that economy, too. Yum China, I've been keeping an eye on their shares, their premarket for that restaurant business, roughly $19 billion market cap business there in China. Those shares also moving higher here premarket.

So you expect a lot of those names where the workers are going to be able to get back out, as well as the broader population and travelers particularly here, because if you go somewhere new in your travel experiences, you're often leaning into some of perhaps those same tried and true names that you know from back home. That's where Yum China might come into play for some of those travel experiences too.

- Yeah. We were just showing the casinos also, those that have exposure in Macau, which is the huge gambling hub, of course, in China, that if people are allowed to travel there and if it makes it-- if China makes it easier to travel, then presumably we'll see an uptick in travel to these various places.

If you look at the effect that these COVID restrictions have had on economic growth writ large in China, we're looking at second quarter GDP of just 1.5% in that nation because of all these shutdowns that we have seen. For the full year, the government says the growth is going to be about 5.5%. Economists say that's probably a little bit too high.

And even though we knew, investors knew eventually China would start to open back up, we didn't know when it would happen. And I should mention, China has cautioned this is not necessarily the absolute end of restrictions. Right? They've said this is because of the vagaries of the Omicron variant specifically that they feel they are able to open back up, kind of leaving the door open that if we see another wave, if something else happens, they could potentially shut back down.

- Let me toss this one onto the desk. What does this mean for the inflationary outlook, guys? Now you have China starting to potentially roar into gear at a time where oil prices are still hovering well over $100 a barrel. I mean, does this send inflation the next leg up?

- You know, it very well could. But I mean, at the same time, even if we're looking at the projections-- just to come back to that for a hot second-- of what China has put out there, 5% or plus, you're looking at some of the banks that have said that's going to come in more towards 4%, 4.4% on the upside there. From what we've seen from the World Bank, I think they're saying about 4.3%.

And so all that considered and coming back to the inflation point too, I think there's still going to be so much of the bottlenecks that are taking place internationally. Globally right now, there is very much the supply chain crisis that it's not just what consumers can get their hands on. But it's almost-- it's also how much they're paying in those instances to purchase those products too, and even in the shift toward services, how much more they're paying on that front as well.

- But to your point also, so the supply probably still crimped, even if you have China open back up to some extent. To your point on demand, oil, for example, is bouncing this morning because obviously that's a huge market.

- Going to go visit Shanghai Disney?

- Group trip? Group trip?

- Sure.

- I mean, we gotta quarantine for, what? Now it's six days.

- Yeah.

- It's still pretty high.

- Yes. Yes.

- All right. All right.

- So not for me.

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