Asian markets fall as China protests and lockdowns cloud outlook

Asian markets fall as China protests and lockdowns cloud outlook

BANGKOK — Stocks skidded in Asia on Monday, with Hong Kong briefly falling more than 4% following weekend protests in various cities against China’s strict zero-COVID lockdowns.

U.S. futures were down after a mixed and shortened session Friday on Wall Street. Oil prices fell more than $2 a barrel.

The unrest in China is the boldest display of public dissent against the ruling Communist Party in years. This followed complaints that policies aimed at stamping out the coronavirus by isolating each case could have worsened the death toll in an apartment fire in Urumqi, in the northwest region of Xinjiang.

China’s infection rate has been lower than the United States and other countries, but authorities are facing growing resentment over the economic and human costs of the approach known as “zero-COVID “as businesses close and families are isolated for weeks with limited access to food and medicine.

“For investors, when it comes to China, trying to predict with any degree the certainty of reopening that has no certainty, no basis or no track record to follow looks like a dangerous game in the context of the disturbing protests and the colossal challenge that China leaders now have in their hands,” Stephen Innes of SPI Asset Management said in a commentary.

Monday at noon, Hong Kong’s Hang Seng HSI,
was down 2% and the Shanghai Composite SHCOMP index,
was down 1%.

China’s central bank on Friday sought to stimulate the economy by easing its reserve requirement ratio, the proportion of assets banks must hold in reserve, by a quarter of a percentage point to 7.8%.

“The cuts are an attempt to support weakening economic growth driven not only by COVID restrictions, but also by a deeper real estate market rout,” Mizuho Bank noted in a report. However, he said, this news was overshadowed by the growing number of virus cases and the protests.

Tokyo NIK’s Nikkei 225 index,
lose 0.5% and the Kospi 180721,
in Seoul lost 1.1%. In Sydney, the S&P/ASX 200 XJO,
fell 0.4% on the release of weaker than expected retail sales data.

On Friday, when markets closed at 1 p.m. EST after the Thanksgiving holiday Thursday, the S&P 500 SPX,
fell less than 0.1% to close at 4,026.12.

Nearly 70% of stocks in the benchmark gained ground, but the broader market was dragged down by technology companies, whose lofty valuations give them more leverage to push the market higher or down.

The Dow Jones Industrial Average DJIA,
rose 0.5% to 34,347.03. The Nasdaq COMP,
fell 0.5% to 11,226.36.

Long-term bond yields were relatively stable, but still hovered around multi-decade highs. The 10-year Treasury yield, which influences mortgage rates, rose to 3.70% from 3.69% on Wednesday night.

Investors remain concerned about the Federal Reserve’s ability to rein in the highest inflation in decades by raising interest rates without going too far and causing a recession.

The central bank’s benchmark rate is currently between 3.75% and 4%, down from near zero in March. He warned he may eventually have to raise rates to previously unanticipated levels to rein in high prices for everything from food to clothing.

Wall Street is receiving several major economic updates this week. The Conference Board’s business group will release its November report on consumer confidence and the US government will release its closely watched monthly jobs report.

In other trading on Monday, U.S. benchmark crude oil CLF23,
lost $2.24 to $74.04 a barrel in electronic trading on the New York Mercantile Exchange. It fell $1.66 on Friday to $76.28 a barrel.

Crude Brent BRNF23,
which is used to price oil for international trade, fell $2.37 to $81.34 a barrel.

The dollar USDJPY,
fell to 138.57 Japanese yen from 139.28 yen.

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