Markets plunge on China lockdowns, rate hike fears
Published: 04:04 PM,Apr 25,2022 | EDITED : 07:04 PM,Apr 25,2022
A man wearing a face mask is seen inside Shanghai Stock Exchange. — AFP
LONDON: Stock markets and oil prices sank on Monday on growing concern that lockdowns in China aimed at fighting a worsening Covid outbreak could further harm a world economy battling decades-high inflation.
The losses extended last week's sell-off triggered by Federal Reserve boss Jerome Powell indicating that the US central bank would hike interest rates by half a percentage point next month and possibly several times more this year.
That has lent strong support to the dollar, which is benefiting also from its traditional haven status.
Dollar-denominated oil prices at one point tumbled more than five per cent on Monday.
Among the world's major stock markets, Shanghai led the losses, closing down more than five per cent.
In Europe, Paris shed 2.2 per cent in afternoon deals.
French President Emmanuel Macron is set to begin efforts to unite a deeply divided nation after winning re-election on Sunday in a battle against rival Marine Le Pen that saw the far right come its closest to taking power.
The euro and yuan slid against the dollar, while sterling lost one per cent to hit a 19-month low at $1.2705.
'The markets have fallen out of bed... in a big way,' noted AJ Bell investment director Russ Mould.
'The prospect of further restrictions in China could lead to a poisonous mix of further inflationary pressure, as supply chains in the so-called 'factory of the world' get disrupted, and weaker economic growth.' Officials in finance hub Shanghai reported 51 deaths on Monday, its highest daily toll despite weeks of strict containment measures, while Beijing warned of a 'grim' situation as infections rise.
Investors were already fleeing risk assets as they become worried that the Fed tightening will knock the pandemic economic recovery off course and dent companies' bottom line.
'The surge in energy, as well as food prices, has started to see consumers prioritise where they spend their money,' noted Michael Hewson, chief market analyst at CMC Markets UK.
Oil prices sank on Monday on fears that China's worsening Covid outbreak could slam demand from the major energy consumer.
'As China is the second largest economy in the world, the situation... has a big impact on commodity markets,' said XTB analyst Walid Koudmani.
Metals prices also slumped on Monday, as did share prices of energy and mining companies.
Elsewhere in Asia, Sri Lanka's stock market halted trading after a nearly 13 per cent plunge as the island nation's beleaguered government is under pressure to resign over a crippling economic crisis. — AFP
The losses extended last week's sell-off triggered by Federal Reserve boss Jerome Powell indicating that the US central bank would hike interest rates by half a percentage point next month and possibly several times more this year.
That has lent strong support to the dollar, which is benefiting also from its traditional haven status.
Dollar-denominated oil prices at one point tumbled more than five per cent on Monday.
Among the world's major stock markets, Shanghai led the losses, closing down more than five per cent.
In Europe, Paris shed 2.2 per cent in afternoon deals.
French President Emmanuel Macron is set to begin efforts to unite a deeply divided nation after winning re-election on Sunday in a battle against rival Marine Le Pen that saw the far right come its closest to taking power.
The euro and yuan slid against the dollar, while sterling lost one per cent to hit a 19-month low at $1.2705.
'The markets have fallen out of bed... in a big way,' noted AJ Bell investment director Russ Mould.
'The prospect of further restrictions in China could lead to a poisonous mix of further inflationary pressure, as supply chains in the so-called 'factory of the world' get disrupted, and weaker economic growth.' Officials in finance hub Shanghai reported 51 deaths on Monday, its highest daily toll despite weeks of strict containment measures, while Beijing warned of a 'grim' situation as infections rise.
Investors were already fleeing risk assets as they become worried that the Fed tightening will knock the pandemic economic recovery off course and dent companies' bottom line.
'The surge in energy, as well as food prices, has started to see consumers prioritise where they spend their money,' noted Michael Hewson, chief market analyst at CMC Markets UK.
Oil prices sank on Monday on fears that China's worsening Covid outbreak could slam demand from the major energy consumer.
'As China is the second largest economy in the world, the situation... has a big impact on commodity markets,' said XTB analyst Walid Koudmani.
Metals prices also slumped on Monday, as did share prices of energy and mining companies.
Elsewhere in Asia, Sri Lanka's stock market halted trading after a nearly 13 per cent plunge as the island nation's beleaguered government is under pressure to resign over a crippling economic crisis. — AFP