NEW YORK, Nov 22 — Global stocks and oil prices slipped yesterday as a spike in Covid-19 cases and newly recorded deaths in China prompted authorities in the world’s second-largest economy to reinstate lockdowns, triggering worries over the economy.
Beijing’s most populous district urged residents to stay at home yesterday as the city’s Covid case numbers rose, while at least one district in Guangzhou was locked down for five days.
“It looked like zero Covid was moving in the right direction and everyone was excited but the Chinese government is taking some strong action and in the short term there’s going to be fits and starts,” said Thomas Hayes, chairman of Great Hill Capital in New York.
MSCI’s broadest index of world shares fell 0.72 per cent, while European stocks were steady.
On Wall Street, all three major indexes were trading lower, led by a selloff in technology, energy, communication services and consumer discretionary stocks.
The Dow Jones Industrial Average fell 0.13 per cent to 33,700.28, the S&P 500 lost 0.39 per cent to 3,949.94 and the Nasdaq Composite dropped 1.09 per cent to 11,024.51.
Oil prices tumbled to their lowest level since early January on a report that Saudi Arabia was holding talks with Opec allies to raise output, but oil clawed back some losses after the kingdom denied it. Crude was also hit by concerns of lower Chinese fuel demand.
Brent crude futures for January settled at US$87.45,
shedding 17 cents, while US West Texas Intermediate (WTI) crude futures for December settled at US$79.73 a barrel, falling 35 cents ahead of the contract’s expiry later yesterday.
“With oil, there’s always the supply and demand picture and right now the market is looking for some insight on the demand side,” said Cliff Hodge, chief investment officer at Cornerstone Wealth in Charlotte, North Carolina.
“Typically oil demand will plummet going into a slowdown or global recession especially this year, which we think is going to be somewhat exacerbated by China,” Hodge added.
The US dollar advanced against most major currencies, recouping recent losses, as traders shunned riskier currencies over concerns about the global economic outlook from the Covid curbs in China. The dollar index rose 0.851 per cent, with the euro down 0.82 per cent to US$1.0239.
US Treasury yields across most maturities inched higher at the start of a Thanksgiving holiday-shortened week on concern about further Federal Reserve interest rate hikes. The yield curve remained deeply inverted on concerns the central bank’s tightening will weigh on economic growth.
Benchmark 10-year notes rebounded from earlier losses and was at 3.8419 per cent, while the yield on 2-year notes was up at 4.5651 per cent. The yields on long-duration 30-year bonds were still lower at 3.9066 per cent.
Gold prices slipped to their lowest in over a week as the dollar extended gains, while the market’s attention turned to the US Federal Reserve’s November meeting minutes due this week.
Spot gold dropped 0.7 per cent to US$1,738.41 an ounce, while US gold futures GCc1 fell 0.90 per cent to US$1,737.40 an ounce. — Reuters
