BANGKOK: Shares slumped in Europe and Asia on Monday, with Hong Kong briefly dipping more than 4 per cent following weekend protests in various cities over China’s strict zero-COVID lockdowns.
US futures were lower and oil prices fell more than USD 2 a barrel.
The unrest in China is the boldest show of public dissent against the ruling Communist Party in decades. It followed complaints that policies aimed at eradicating the coronavirus by isolating every case might have worsened the death toll in an apartment fire in Urumqi in the northwestern Xinjiang region.
“For investors, when it comes to China, trying to predict with any degree the reopening certainty that has no certainty, basis, or track record to go by is looking like a dangerous game in the context of the disquieting protests and the colossal challenge China’s leaders now have on their hands," Stephen Innes of SPI Asset Management said in a commentary.
Rising numbers of COVID cases could further disrupt manufacturing and transport, adding to headaches over supply chains and inflation.
Germany's DAX fell 0.8 per cent to 14,421.88 while the CAC 40 in Paris lost 0.8 per cent to 6,656.18. Britain's FTSE 100 gave up 0.6 per cent to 7,448.10.
The future for the S&P 500 was down 0.7 per cent while that for the Dow Jones Industrial Average was 0.5 per cent lower. On Friday, the S&P 500 fell less than 0.1 per cent while the Dow rose 0.5 per cent. The Nasdaq fell 0.5 per cent.
In Asian trading on Monday, Hong Kong's Hang Seng fell 1.6 per cent to 17,297.94 and the Shanghai Composite index lost 0.8 per cent to 3,078.55.
Shares in telecoms equipment maker ZTE fell 4.2 per cent after US regulators banned sales of its products in the US.
The Federal Communications Commission said Friday it was banning the sale of communications equipment made by ZTE and Huawei Technologies and restricting the use of some China-made video surveillance systems, citing an “unacceptable risk” to national security.
On Friday, China's central bank sought to boost the economy by easing its reserve requirement ratio, the proportion of assets banks must hold in reserve, by a quarter percentage point to 7.8 per cent. But pandemic-related developments overshadowed that news.
Tokyo's Nikkei 225 index shed 0.4 per cent to 28,162.83 and the Kospi in Seoul lost 1.2 per cent to 2,408.27. In Sydney, the S&P/ASX 200 declined 0.4 per cent to 7,229.10 following the release of weaker-than-expected retail sales data.
Bangkok's SET was 0.2 per cent lower while the Sensex in Mumbai added 0.3 per cent.
Wall Street gets several big economic updates this week. The Conference Board business group will release its November report on consumer confidence and the US government will release its closely watched monthly employment report.
Investors remain concerned about whether the Federal Reserve can tame the hottest inflation in decades by raising interest rates without going too far and causing a recession.
The central bank’s benchmark rate currently stands at 3.75 per cent to 4 per cent, up from close to zero in March. It has warned it may have to ultimately raise rates to previously unanticipated levels to rein in high prices on everything from food to clothing.
In other trading on Monday, US benchmark crude oil lost USD 2.27 to USD 74.01 per barrel in electronic trading on the New York Mercantile Exchange. It gave up USD 1.66 on Friday to USD 76.28 per barrel.
Brent crude, which is used to price oil for international trading, sank from USD 2.57 to USD 81.14 per barrel.
The dollar fell to 137.71 Japanese yen from 139.28 yen. The euro rose to USD 1.0451 from USD 1.0379.