Stock Market

China’s COVID protests cause the stock market to fall.

Monday was a bad day for stocks and commodity prices. This was because of rare protests in major Chinese cities against the country’s strict zero-COVID curbs, which made investors worried about how this would affect growth in the world’s second-largest economy.

MSCI’s broadest index of Asia-Pacific stocks outside of Japan was down 1.5% after falling 2.2% at the start of the day. This drop was caused by a selloff in Chinese markets.

At the start of trading, Hong Kong’s Hang Seng Index fell 4.16 percent, but it gained some ground and is now down 2.32 percent. After opening down 2.2%, the CSI300 Index was down 1.8%, and the yuan also went down.

Related: Foxconn, an Apple supplier, apologises for a recruiting error at a COVID-affected China plant.

George Boubouras, executive director of K2 Asset Management in Melbourne, said, “It’s clear that China’s strict lockdowns have been hurting consumer and business sentiment for a while now, and the constant downgrades to China’s GDP have been going on for well over a year, with more to come.”

“The markets don’t like not knowing what’s going to happen, and investors will want to know more about China’s very strict lockdown protocols.”

Fears about the growth of the Chinese economy also hurt the markets for commodities.

On Monday, U.S. crude fell 3% to $73.99 a barrel and Brent crude fell 2.86% to $81.24 a barrel. This was because the COVID protests in China, the top oil importer, made people worried about demand.

Copper and other metal prices also dropped because of the protests.

Australia’s main stock market index closed down 0.42 percent, and its currency, which is sensitive to risk, fell by more than 1 percent. Japan’s Nikkei stock index was down 0.6%.

South Korea’s KOSPI 200 index went down by 1.2%, and New Zealand’s S&P/NZX50 index went down by 0.65%.

All of the major markets in Europe had stock futures that were going down, and the S&P 500 futures were down 0.7%.

Investors were more worried about China’s COVID policies than about the central bank’s announcement on Friday that it would cut the reserve requirement ratio (RRR) by 25 basis points. This would free up about $70 billion in cash to help a slowing economy.

On Monday, 40,052 new infections were reported in China, making it the fifth day in a row that this happened.

On Sunday night, protesters and police fought in Shanghai. This was the third day of protests against China’s strict COVID rules.

As COVID restrictions were put in place to try to stop new outbreaks, there were also protests in Wuhan, Chengdu, and parts of Beijing.

Robert Subbaraman, the Asia-ex-Japan chief economist for Nomura, said that there is a chance that China’s plan for dealing with COVID is too slow, that rising COVID cases will lead to more protests, and that social unrest will hurt the economy even more.

He said, “Things change a lot.” “Protests could also be the thing that gets the government to make a clearer plan for how the country will learn to live with COVID, set a more transparent timetable, and speed up China’s transition to living with COVID.”

The dollar rose 0.57% against the yuan, but not as much as it did earlier in the day.

Because of the COVID rules and the protests that followed, there are fears that China’s economy will take a bigger hit than was first thought.

CBA analysts said on Monday, “Even if China is on track to eventually move away from its zero-COVID approach, the low level of vaccination among the elderly means that the exit is likely to be slow and could be chaotic.” “The effects on the economy won’t likely be small.”

The yield on the benchmark 10-year Treasury note went up from Friday’s close of 3.702% to 3.6314%. The two-year work, which shows what traders think Fed fund rates will be, hit 4.4278%, while the U.S. market closed at 4.479%.

Related: Asian stocks didn’t move much because China COVID went up and tech stocks went down.

The dollar fell 0.46 percent against the yen, making it worth 138.46. Earlier in the day, the dollar was worth more than the yen. It is still far from its all-time high of 151.94 on October 21.

The euro went down 0.4% after going up 4.94 % in a month, while the dollar index went up to 106.39. The dollar index compares the dollar to a basket of currencies from other major trading partners.

Gold went down a little bit. The spot price of gold was $1,749.54 per ounce.

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