Anti-lockdown protests in China rock stocks and oil

  • China announces new record for local COVID cases
  • Commodities sold off on demand concerns
  • The dollar slides against the yen and the Swiss franc

NEW YORK/LONDON, Nov 28 (Reuters) – U.S. stocks followed a decline in global stocks and oil sold off on Monday as rare protests in major Chinese cities against the country’s strict zero-COVID restrictions fueled concerns about global economic growth.

A rise in COVID cases and clashes between police and protesters in several major Chinese cities over the weekend also helped push down US Treasury yields and even safe-haven assets like the dollar and gold were in the red.

“There are concerns about the increase in COVID cases in China and how the government is going to respond. We have moved from what we considered a reopening to probably more extensive restrictions,” said Matthew Miskin, co. -Head of Investment Strategy at John Hancock Investment Management. .

“If you have one of the biggest economies going offline, it’s going to weigh on global growth. It’s going to impact all businesses in one way or another.”

The Dow Jones Industrial Average (.DJI) fell 192.36 points, or 0.56%, to 34,154.67, the S&P 500 (.SPX) lost 30.51 points, or 0.76%, to 3,995.61 and the Nasdaq Composite (.IXIC) fell 90.21 points, or 0.8%, to 11,136.14.

The pan-European STOXX 600 index (.STOXX) slipped 0.50% and the MSCI gauge of stocks across the world (.MIWD00000PUS) lose 0.71%.

Emerging Markets Equities (.MSCIEF) fell 0.94%. MSCI’s broadest index of Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) closed down 1.1%, while the Japanese Nikkei (.N225) lost 0.42%.

Oil prices, sensitive to the stringency of China’s lockdown as a barometer of demand, pared some losses, but U.S. crude had fallen to its lowest level since late December 2021. Brent crude, after falling to its lowest level since early January, last traded at $82.49, down 1.36% on the day. U.S. crude fell 0.93% to $75.57 a barrel.

In currencies, the Swiss franc and the Japanese yen advanced, while the Australian dollar and the Chinese yuan underperformed. Meanwhile, the US dollar fell, which analysts said was unusual given its typical role as a safe haven.

“That may suggest that the swing against the dollar in the sense of broader market sentiment or market positioning may be a bit deeper this morning and that could well be significant,” Shaun Osborne, chief foreign exchange strategist at Scotiabank in Toronto, said.

View of a giant screen of stock market indices, following the outbreak of the coronavirus disease (COVID-19), in Shanghai, China October 24, 2022. REUTERS/Aly Song/File Photo

The movement of the dollar had some market analysts blame falling US bond yields which made the greenback less attractive against the Japanese currency.

The dollar index fell 0.292%, with the euro up 0.13% at $1.0409. The Japanese yen strengthened 0.28% against the greenback to 138.71 to the dollar, while the pound last traded at $1.2044, down 0.41% on the day.

The dollar fell 0.4% against the Swiss franc after earlier falling 0.77%.

CHINA IS AFRAID

In the Treasuries Benchmark, 10-year bonds fell 2.8 basis points to 3.674%, from 3.702% on Friday evening.

The 30-year bond was last down 2.7 basis points to yield 3.725%, from 3.752%, while the 2-year bond was down 3.9 basis points to yield 4.4402 %.

Fears over China’s economic growth hit other commodity markets, with copper and other metals also down.

Worries over China’s COVID policies eclipsed any support for China’s central bank’s 25 basis point cut in the reserve requirement ratio (RRR) announced on Friday, which would free up about $70 billion to support a faltering economy.

China had announced a fifth consecutive day record new local COVID cases with 40,052 infections on Monday, while in Shanghai Protesters and police clashed on Sunday night as protests erupted for a third day.

There were also protests in Wuhan, Chengdu and parts of the capital Beijing as COVID restrictions were put in place.

Gold prices gave up their gains after hitting a one-week high of $1763.70 an ounce. Spot gold fell 0.5% to $1,748.07 an ounce.

Reporting Sinéad Carew and Karen Brettell in New York, Lawrence White in London, Scott Murdoch in Sydney; Editing by Barbara Lewis, Chizu Nomiyama and Susan Fenton

Our standards: The Thomson Reuters Trust Principles.

Leave a Comment

Your email address will not be published. Required fields are marked *