China’s blue-chips closed lower on Monday after Shanghai was locked down to curb the spread of Covid-19 infections, raising fears of an economic slowdown, while Hong Kong gained for the first time in three sessions off the back of a strong showing by its tech companies.
China’s financial hub of Shanghai launched a planned two-stage lockdown of the city of 26 million people on Monday. A record 3,450 asymptomatic Covid cases were reported there on Sunday, accounting for nearly 70% of the nationwide total, along with 50 symptomatic cases.
The blue-chip CSI300 index fell 0.6% to 4,148.47 but in Hong Kong tech companies added 2.6%, with Alibaba Group and Tencent Holdings up 3.5% and 2.8%, respectively, with traders lifted by hopes of talks over both Russia-Ukraine and the US-China auditing row making progress.
Meituan surged 11.6% after the food delivery giant reported a better-than-expected growth in fourth-quarter revenue on Friday.
The Hang Seng Index rose 1.31%, or 280.09 points, to 21,684.97. The Shanghai Composite Index edged up 0.07%, or 2.26 points, to 3,214.50, while the Shenzhen Composite Index on China’s second exchange slipped 0.82%, or 17.23 points, to 2,096.50.
Tokyo’s key Nikkei index snapped a nine-day winning streak and closed lower on Monday on profit-taking, as investors digested news of the lockdown imposed in Shanghai.
The benchmark Nikkei 225 index lost 0.73% or 205.95 points to end at 27,943.89, while the broader Topix index slipped 0.41% or 8.10 points to 1,973.37.
Indian stocks rose though with Mumbai’s signature Nifty 50 index up 0.40%, or 69.00 points, to close at 17,222.00.
Meanwhile, Chinese regulators and their US counterparts are working hard to solve the audit dispute affecting US-listed Chinese firms and want to achieve effective and sustainable cooperation as soon as possible, a state-run newspaper reported on Sunday.
That came after the US public company accounting regulator had said last week recent media speculation about an imminent deal with China was “premature.”
Yen’s Dramatic Descent
Oil prices slid on Monday while the yen’s stomach-churning 1.5% descent continued as the Bank of Japan stood in the way of higher yields.
The spread of restrictions in China, the world’s biggest oil importer, saw Brent crude skid $4.35 to $116.33, while US crude fell $4.5 or 4% to $109.38.
World stocks were largely flat, holding their ground in the face of another brutal selloff in major bond markets.
Ten-year US Treasury yields pushed decisively above the 2.5%-marker for the first time since 2019 and even Japanese yields defied central bank intervention to hit fresh six-year highs.
MSCI’s world stock index was flat, resilient in the face of a radically more hawkish Federal Reserve and surging bond yields.
Russia-Ukraine Peace Talks
Risk sentiment was helped by hopes of progress in Russian-Ukranian peace talks to be held in Turkey this week after President Volodymyr Zelenskiy said Ukraine was prepared to discuss adopting a neutral status as part of a deal.
“Sentiment has been surprisingly resilient in stock markets, which are buying positive headlines from the war in Ukraine,” said Jan von Gerich, chief analyst at Nordea.
Timothy Graf, State Street’s head of EMEA macro strategy, said selling bonds felt like “the path of least resistance right now.”
“The Fed’s given no sign it will slow down, if anything they have ratcheted up the hawkish guidance,” he added.
In commodity markets, gold softened to $1,931 an ounce, down about 1.3%.
Key figures around 0810 GMT
Tokyo – Nikkei 225 > DOWN 0.7% at 27,943.89 (close)
Hong Kong – Hang Seng Index > UP 1.3% at 21,684.97 (close)
Shanghai – Composite > UP 0.1% at 3,214.50 (close)
London – FTSE 100 > UP 0.3% at 7,505.00
Brent North Sea crude > DOWN 4.0% at $115.81 per barrel
West Texas Intermediate > DOWN 4.3% at $109.01 per barrel
New York – DOW > UP 0.4% at 34,861.24 (close)
- Reuters with additional editing by Sean O’Meara