Wednesday, March 22, 2023 | Sha'ban 29, 1444 H
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Oil prices plunge on China lockdowns

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Muscat: The Oman crude was traded for $99.52 (June delivery), a drop of $ 5.45 from Saturday's price of $104.97.

Stock markets and oil prices sank 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. Among the world's major stock markets, Shanghai led the losses, closing down more than five percent. In Europe, Paris shed 2.3 percent approaching the halfway stage.

French President Emmanuel Macron is set to begin efforts to unite a deeply divided nation after winning re-election Sunday in a battle against rival Marine Le Pen that saw the far right come its closest to taking power. In foreign exchange Monday, the euro slid against the dollar, while oil prices at one point tumbled more than five percent. The dollar was up sharply also against the pound, but down versus the yen, seen as a haven investment in times of economic turbulence.

"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 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 prioritize where they spend their money," noted Michael Hewson, chief market analyst at CMC Markets UK. Oil prices sank 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 percent plunge as the island nation's beleaguered government is under pressure to resign over a crippling economic crisis.

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