Covid fears in China as Beijing expands mass testing

SINGAPORE – Mainland Chinese stocks struggled to find direction on Tuesday, swinging between gains and losses as Covid fears took hold with Beijing expanding mass testing.

At the close, the Shanghai composite slid 1.44% to 2,886.43, while the Shenzhen component fell 1.66% to 10,206.64. The CSI 300 finished 0.81% to 3,784.12.

Hong Kong’s Hang Seng Index was almost flat in the last trading hour, after falling more than 3% the previous day. The Hang Seng Tech Index rose almost 3%.

The biggest gainers in Hong Kong included ZTE, which jumped 7.5%.

Earlier, China’s central bank published comments from an interview with the Financial Times saying it has noted recent “fluctuations” in the country’s stock markets, which it said were mainly caused by investor confidence.

“Currently, my country’s economic fundamentals are strong, the potential for endogenous economic growth is enormous, and substantial progress has been made in preventing and defusing financial risks,” according to the comments in English. The People’s Bank of China added that it will increase support for the economy, especially for industries severely affected by the pandemic.

Markets reacted negatively to news that covid is spreading faster in China, raising fears of further lockdowns and reduced production. This directly impacted the Asian markets and also spread throughout the global financial markets.

ANZ Research

Brian Martin and Daniel Hynes

Mainland Chinese and Hong Kong stocks tumbled on Monday on concerns about a rise in Covid and possible lockdowns in Beijing. Beijing also announced late Monday that the mass testing will be expanded to 10 more districts and an economic development area, according to Reuters.

“Markets reacted negatively to news that COVID is spreading more rapidly in China, prompting fears of additional lockdowns and reduced production. This directly affected Asian markets and also global financial markets,” they wrote. ANZ Research analysts Brian Martin and Daniel Hynes on a Tuesday. Note.

Zhang Zhiwei, chief economist at Pinpoint Asset Management, said he sees risks of China’s GDP shrinking in the second quarter.

“Many high-frequency indicators such as mobility, trucking, coal utilization from power plants show negative growth. It is not clear where the bottom of this economic slowdown lies without a change in zero tolerance policy.” , said.

Other mixed Asian markets

Japan’s Nikkei 225 rose 0.41% to close at 26,700.11, while the Topix index rose 0.11% to 1,878.51. South Korea’s Kospi rose 0.42% to finish at 2,668.31.

However, Australian shares fell when trading resumed after a holiday on Monday. The S&P/ASX 200 was down 2.08% at 7,318.

Major miners tumbled as Rio Tinto fell more than 4%, Fortescue Metals sank 6.88% and BHP slumped nearly 6%.

Turning to profit, HSBC reported its first-quarter results, which showed pre-tax profit fell 27% compared to a year earlier, to $4.2 billion. Still, it beat the $3.72 billion average estimate of 16 analysts compiled by HSBC, according to Reuters.

Hong Kong-listed HSBC shares fell 4.65% in the afternoon.

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MSCI’s broader index of Asia-Pacific shares outside of Japan rose 0.24%.

US stocks were in negative territory earlier in the day but recovered at the close. The Dow Jones Industrial Average trimmed an intraday loss of nearly 500 points on Monday, rising 238.06 points, or 0.7%, to 34,049.46. The S&P 500 rose 0.6% to 4,296.12. The Nasdaq Tech Composite gained 1.3% to 13,004.85.

foreign exchange and oil

The US Dollar Index, which tracks the greenback against a basket of its peers, was at 101.839, extending its rise from levels just above 101.

The Japanese yen was trading at 127.81 per dollar, firmer than previous levels of 128. The Australian dollar was at $0.7192, trading lower from around $0.72 earlier.

Oil prices traded lower in Asia on Tuesday, following Monday’s downward moves as the Covid situation in China raised demand fears.

US crude futures traded 0.67% lower at $97.91 a barrel. International benchmark Brent crude futures fell 0.49% to $101.80 a barrel.

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