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Global stocks slide after China zero Covid protests

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Protests in China over government’s Covid-19 policies drag markets Global stocks and oil prices fell on Monday after sentiment and increased uncertainty over the outlook for the world’s second-largest economy.

Wall Street’s benchmark S&P 500 opened 0.6% lower in early New York trade, paring a gain of more than 3% for the index over the past month. The tech-heavy Nasdaq Composite fell 0.5%. In Europe, the Stoxx 600 fell 0.9 percent, while London’s FTSE 100 fell 0.4 percent.

Oil prices fell sharply, with international benchmark Brent crude down nearly 3%, and up less than 5% for the year. U.S. West Texas Intermediate crude fell 1.8%.

In Hong Kong, the Hang Seng China Enterprises Index fell as much as 4.5% before retreating to 1.6%. China’s CSI 300 index of shares listed in Shanghai and Shenzhen fell as much as 2.8 percent before narrowing to just over 1 percent.

Demonstrations erupted in Beijing, Shanghai and Shenzhen over the weekend in other cities against government-induced pandemic restrictions. Discontent has intensified since a fire in the city of Urumqi killed 10 people last week, sparking vigils across China as authorities deny allegations that coronavirus restrictions have hampered rescue efforts and prevented residents from fleeing the blaze.

Emmanuel Cau, head of European equity strategy at Growing Barclays, said the turmoil in China gave investors a “reality check”.

“Hopes of China’s reopening are part of a bullish year-end narrative,” Cau added. “Investors now realize that whatever direction the coronavirus takes, it’s not going to be a smooth process.”

Protests rise as coronavirus cases rise, traders say Adding to the uncertainty over China, local officials have stepped up pressure to enforce President Xi Jinping’s strict zero-Covid policy.

“Investor confidence has been battered this year and it’s hard to understand what direction the market is going to be next,” said Louis Tse, managing director at Hong Kong-based brokerage Wealthy Securities. The gains have pushed the Hang Seng China Enterprises Index up more than 17 percent this month.

The use of white paper as a symbol of protest against censorship has caused problems for some Chinese listed companies. Shanghai-listed shares of paper supplier Shanghai Chenguang Stationery fell as much as 3.1 percent on Monday. It clarified in a bourse filing that claims circulating on social media that the company had stopped selling A4 paper “in the interests of national security” were bogus.

China’s economic outlook is confusing and the yuan is under pressure. The Chinese currency fell 1.1 percent to 7.24 yuan per dollar.

Lee Hardman, currency analyst at MUFG, said the dollar index, which trades against a basket of international peers, was stable, benefiting in part from “China risk. outbreak”.

Moody’s Investors Service vice president Martin Page said the protests “had the potential to have a negative impact on credit if sustained and lead to a more forceful response from the authorities”.

“While this is not our base case,” he added, “it will lead to increased uncertainty about the level of political risk in China, which in turn will spill over into the damaged economy in an already weak economy.” Confidence and consumption”

turmoil weighed on stocks elsewhere in Asia, with Japan’s benchmark Topix down 0.7%, while South Korea’s Kospi fell 1.2%.



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