Asian shares fall as China protests, lockdowns cloud outlook
BANGKOK — Shares skidded in Asia on Monday, with Hong Kong briefly dipping more than 4% following weekend protests in various cities over China‘s strict zero-COVID lockdowns. After a mixed session on Wall Street Friday,
U.S. futures fell. Oil prices fell by more than $2 per barrel.
The unrest in China is the most outspoken demonstration of public disillusionment against the ruling Communist Party over the past years. 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.
China has a lower infection rate than the United States, but authorities are experiencing growing resentment about the economic and human cost of the “zero COVID” approach. Families are kept away from food and medicine for weeks and businesses are closed. “Investors, when it is China, trying to predict the reopening certainty without any certainty, basis or track record to follow is looking like a dangerous task in the context of disquieting protests and the colossal problem China’s leaders now face,” Stephen Innes, of SPI Asset Management, said in a comment.
By midday Monday, Hong Kong’s Hang Seng was 2% lower at 17,225. 41 and the Shanghai Composite index had declined 1% to 3,069.66. On Friday, China’s central banking sought to boost the economy by lowering its reserve requirement ratio (the amount of assets banks must keep in reserve) by a quarter percent to 7.8%.
” The cuts are meant to support weakening growth, dragged down by COVID restrictions and a deeper property market crisis,” Mizuho Bank stated in a report. However, it noted that the news was overshadowed in part by rising virus cases and protests.
Tokyo’s Nikkei 225 index shed 0.5% to 28,131. 00 and the Kospi in Seoul lost 1.1% to 2,411.34. In Sydney, the S&P/ASX 200 shed 0.4% to 7,230. 30 following the release of weaker than expected retail sales data.
Bangkok’s SET was 0.1% lower while the Sensex in Mumbai added 0.2%.
On Friday, when markets closed at 1 p.m. Eastern following the Thanksgiving day holiday on Thursday, the S&P 500 fell less than 0.1% to close at 4,026.12.
Nearly 70% of stocks in the benchmark index gained ground, but the broader market was dragged lower by technology companies, whose high valuations give them more heft in pushing the market higher or lower.
The Dow Jones Industrial Average rose 0.5% to 34,347.03. The Nasdaq fell 0.5% to 11,226.36.
Long-term bond yields were relatively stable but still hovered around multi-decade highs. The yield on the 10-year Treasury, which influences mortgage rates, rose to 3. 70% from 3. 69% late Wednesday.
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 benchmark rate of the central bank is currently at 3. 75% to 4%, up from close to zero in March. It has warned that it may need to raise rates to previously unanticipated amounts to control high prices on everything, from food to clothing.
Wall Street will receive several important economic updates this week. The November Conference Board report on consumer confidence will be released by the Conference Board, while the U.S. government’s monthly employment report will be closely watched.
In other trading Mondays, U.S. benchmark crude oil lost $2. 24 to $74. 04 per barrel in electronic trading on the New York Mercantile Exchange. It lost $1. 66 on Friday to $76. 28 per barrel.
Brent crude oil, which is used for international trading and price oil, dropped $2. 37 to $81. 34 per barrel.
The dollar fell to 138. 57 Japanese yen from 139. 28 yen. The euro fell to $1. 0358 from $1.0379.
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