Asian stocks fall as Covid surges in China alarm investors

Asia-Pacific stock prices fell on Thursday morning as China’s Covid surge weighed heavily on markets.

Investors cheered China’s easing of its zero-Covid controls which had severely hampered the world’s second largest economy. However, they now worry about the potential impact on global supply chains.

Japan, the United States and Italy have placed restrictions on Chinese visitors. A senior US official also warned that this surge could lead to new Covid variants.

In early trade, Tokyo and Hong Kong were both down by more than one percent. Also in the red were Sydney, Taipei, Taipei, Shanghai and Taipei.

Volumes were low in the last trading week of the year. Investors discussed the possibility of a recession in 2023 and the role of central banks, especially the US Federal Reserve, in tackling rampant inflation.

While the Fed and others have increased interest rates repeatedly to stop soaring prices from rising, higher borrowing costs slow down economic activity.

Craig Erlam from OANDA stated that the key trading themes would continue to dominate January. He said, “most notably, how far central bank are willing to push rates in order to show their determination to get inflation back to target.” In a note Wednesday, Craig Erlam of OANDA wrote.

“Many people have already begun to ease off the brake, and we’re seeing lots of signs that pressures are easing, although perhaps not as much than policymakers would like.”

– Oil prices drop –

After sharp falls on Wall Street on Wednesday that saw major indexes close in the red, the Asia-Pacific shares plunged.

The Dow lost 1.1%, while tech-rich Nasdaq dropped 1.4 percent.

As hopes for a “Santa Claus rally”, the US lost some ground.

The Santa Claus rally, a seven-session stretch that spans Christmas and New Year, is when stocks tend to drift higher in light trade.

Analysts believe that low-volume, low risk trades will continue until the end of the year.

The two major crude oil contracts were lower in the oil markets. Traders were concerned about China’s Covid epidemic, which could lead to a global resurgence and depressing energy demand.

Germany has reacted to Russia’s ban of oil sales to countries or companies that comply with its price caps on crude oil exports.

As a result of the Russian invasion, the price ceiling of $60 per barrel was set by Australia, G7, and the European Union.

It is a plan to reduce Russia’s revenues while still supplying the global markets.

– Key figures around 0315 GMT

Tokyo – Nikkei 225: DOWN 1.3 percent at 25,998.76

Hong Kong – Hang Seng Index: DOWN 1.0 percent at 19,704.05

Shanghai – Composite: DOWN 0.2 percent at 3,081.08

Euro/dollar: UP to $1.0624 at $1.0618 GMT on Tuesday

Pound/dollar: UP at £1.2039 starting at $1.2018

Euro/pound: Down at 88.26 pence versus 88.30

Dollar/yen: Down at 133.68 vs 134.39 Yuen

West Texas Intermediate: DOWN 0.6 percent at $78.47 per barrel

Brent North Sea crude: DOWN 0.5 percent at $82.83 per barrel

New York – Dow: DOWN 1.1 percent at 32,875.71 (close)

London – FTSE 100: UP 0.3 percent at 7,497.19 (close)

bur-qan/smw