China’s Covid fears as Beijing expands mass testing

SINGAPORE – Chinese stocks continued to fall on Tuesday after falling the previous day as investors fled markets in response to Covid fears in China as Beijing expands mass testing.

The Shanghai composite decreased 0.74% while the Shenzhen component decreased 0.7%. CSI 300 fell 0.49 per cent.

Hong Kong’s Hang Seng Index received the trend, rising 0.4% after falling more than 3% the day before.

Markets reacted negatively to the news that Covid was spreading faster in China, leading to fears of further shutdowns and reduced production. This directly affected the Asian markets and also rippled through the global financial markets.

ANZ Research

Brian Martin and Daniel Hynes

Shares of mainland and Hong Kong had fallen on Monday as concerns about a Covid rise and potential shutdowns in Beijing took hold. Beijing also announced late Monday that mass testing will be expanded to a further 10 districts and an economic development area, according to Reuters.

“Markets reacted negatively to news that COVID was spreading faster in China, leading to fears of further shutdowns and reduced production. This directly affected Asian markets and also tumbled through global financial markets,” wrote ANZ Research analysts Brian Martin and Daniel Hynes in a Tuesday Note.

Zhang Zhiwei, chief economist at Pinpoint Asset Management, said he sees risks that China’s GDP could shrink in the second quarter.

“Many high-frequency indicators such as mobility, truck freight, power plant coal utilization are showing negative growth. It is not clear where the bottom of this economic downturn is without a change in the zero tolerance policy,” he said.

Other Asian markets mingled

Japan’s Nikkei 225 rose 0.37%, while Topix rose 0.11%. South Korea’s Kospi rose 0.49 per cent.

Australian stocks, however, fell as trading resumed from a public holiday on Monday. The S & P / ASX 200 plunged almost 2%.

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Major miners fell as Rio Tinto fell more than 4%, Fortescue Metals dived 6.4% and BHP plunged more than 5%.

MSCI’s broadest index of Asia-Pacific equities outside Japan rose 0.1 percent.

In earnings, HSBC is set to report its first quarter results. Economic data for Tuesday will include South Korea’s gross domestic product for the first quarter.

U.S. stocks were in negative territory earlier in the day, but recovered at the close. The Dow Jones Industrial Average reduced an almost 500-point intraday loss on Monday, rising 238.06 points, or 0.7%, to 34,049.46. The S&P 500 rose 0.6% to 4,296.12. The technology-heavy Nasdaq Composite rose 1.3% to 13,004.85.

Currencies and oil

The US dollar index, which follows the dollar against a basket of its peers, stood at 101,545, extending the rise from levels just above 101.

The Japanese yen is trading at 127.54 per share. dollars, which is a touch firmer than levels above 128.1 previously. The Australian dollar was at $ 0.7185, trading down slightly from around $ 0.718 previously.

Oil prices rose Tuesday morning in Asian trade after falling on Monday as Covid fears in China boosted fears of demand.

Futures on U.S. crude oil traded 0.33% higher at $ 98.87 per share. barrel. International benchmark Brent crude oil futures rose 0.40% to $ 102.73 per share. barrel.

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