Introduction: China lockdown worries hit markets
Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.
Stock markets are beginning the new week on the back foot amid anxiety over China’s Covid-19 lockdowns and the health of the global economy.
Growth fears are rising as authorities in Beijing began a mass testing push after a spike in Covid cases.
vCard.red is a free platform for creating a mobile-friendly digital business cards. You can easily create a vCard and generate a QR code for it, allowing others to scan and save your contact details instantly.
The platform allows you to display contact information, social media links, services, and products all in one shareable link. Optional features include appointment scheduling, WhatsApp-based storefronts, media galleries, and custom design options.
Around 3.5 million residents and workers in its biggest district, Chaoyang, must report for three coronavirus tests this week.
More than a dozen residential buildings were put under lockdown in Chaoyang, an affluent downtown area home to embassies and international businesses. Fears of a City-wide lockdown sent Beijingers racing to supermarkets to stock up on food today.
The city has also imposed tight entry controls, and some gyms and after-school activity providers have stopped in-person classes.
With Shanghai further tightening its restrictions on the movement of some residents in the financial hub last week, concerns that tough lockdowns could stall China’s recovery are growing. That would have a knock-on impact on the global economy, creating more supply chain disruption and hitting energy demand.
China’s stock market has taken a slide, with the benchmark CSI300 index tumbling 3.5% today to its lowest level since late May 2020.
Other Asia-Pacific markets have been hit too, with Hong Kong’s Hang Seng shedding 3.3%, Japan’s Nikkei down 1.5% and Australia’s S&P/ASX index losing 1.6%.
Commodities are weakening too, with iron ore prices falling and oil at a two-week low.
China faces a “rapidly deteriorating growth outlook amid zero-Covid restrictions”, says Alvin Tan, analyst at RBC Capital Markets.
The renminbi has come under further pressure overnight after news that a Beijing district has to undergo three days of Covid testing starting today, plus Shanghai entering a fourth week of lockdown. Crude oil, iron ore, and Chinese equities have all slumped.
European markets are set for a lower open, adding to last Friday’s losses, with the main indices down over 1% in pre-market trading.
Wall Street ended last week with a tumble, after Federal Reserve chair Jerome Powell said it was ‘absolutely essential,’ to tame inflation, and that the Fed could lift interest rates by 50 basis points in May.
Also coming up today…
The CBI’s latest industrial trends report will highlight the pressures on UK factories from rising costs, while the IFO institute will update us on Germany’s business confidence.
And Twitter has reportedly begun negotiations with Elon Musk after pressure from shareholders, after Musk disclosed details of how his $43bn acquisition offer would be finances.
Reuters reports:
The company’s decision to engage with Musk, taken earlier on Sunday, did not mean it would accept his $54.20 a share bid, the sources said. It signified, however, that Twitter was exploring whether a sale to Musk was possible on attractive terms.
Musk, chief executive of Tesla, has been meeting with Twitter shareholders in the last few days seeking support for his bid. He has said Twitter needs to be taken private to grow and become a genuine platform for free speech.
The agenda
- 9am BST: Ifo survey of Germany’s business climate in April
- 10am BST: Eurozone construction output report for February
- 11am BST: CBI’s industrial trends survey of UK factories in April
- 1.30pm BST: Chicago Federal Reserve’s national activity index
- 3.30pm BST: Dallas Federal Reserve manufacturing index
Here’s the mood in the markets:
Not a great advert for Mondays so far. Equities, oil, metals, the yuan, the Australian dollar all down. Dollar up and away…Markets now…. pic.twitter.com/qFc5NKJmRV
— kit Juckes (@kitjuckes) April 25, 2022
There’s no sign of a Macron relief rally in Europe today.
European stocks have hit their lowest in over a month, as anxiety over China’s economy and the prospect of US interest rate rises overshadow last night’s French presidential election result.
The pan-European Stoxx 600 index is down 1.65%, the lowest point since 16th March, with France’s CAC index sliding 1.7% and Germany’s DAX off 1.4%.
🔔 European Opening Bell 🔔
🇬🇧 FTSE 100 Down 1.5%
🇪🇺 STOXX 50 Down 1.5%
🇪🇺 STOXX 600 Down 1.6%
🇩🇪 DAX Down 1.6%
🇫🇷 CAC 40 Down 1.8% pic.twitter.com/oHvSKBQogZ
— PiQ (@PriapusIQ) April 25, 2022
Victoria Scholar, head of investment at interactive investor, says:
Despite some political relief in Europe after Macron’s victory, European markets have been overshadowed by broader macro concerns opening under pressure and taking their cues from the sharp sell-off on Wall Street on Friday and in China overnight.
The FTSE 100 has broken below support at 7,400 with China sensitive stocks in the mining sector like Glencore, Anglo American, Rio Tinto leading the leg lower.”
FTSE 100 hits five-week low
The UK’s stock market has opened sharply lower, as China concerns knock the benchmark index down around 1.5%.
The FTSE 100 is currently off by 115 points at 7406 points, its lowest in five weeks, with almost every member in the red.
Mining and commodity stocks are leading the fallers, such as Glencore (-5.5%), Anglo American (-4.5%) and Rio Tinto (-4%).
Insurance group Prudential (-3.5%) which is focused on Asia-Pacific markets, and oil giants Shell (-2.9%) and BP (-3.5%) are also weaker.
Fears about the economic toll of China’s strict Covid Zero policy have pushed its currency, the yuan, to a one-year low.
Bloomberg has the details:
The benchmark CSI 300 Index dropped more than 4% to the lowest since May 2020, wiping out gains from a March pledge by officials to support the economy. The onshore yuan fell to its weakest in a year on concerns about rising capital outflows and oil sank below $100 on worries over Chinese demand.
Concerns over the outbreaks in Shanghai and Beijing are echoing through global markets, Bloomberg adds:
“There are concerns about the Covid situation in Beijing evolving into what happened in Shanghai with some prolonged lockdowns that bites the economy,” said Kevin Li, portfolio manager at GF Asset Management (Hong Kong) Ltd.
Traders are balking at the potential impact of coronavirus restrictions on growth in the world’s second-largest economy, which was already showing signs of slowing down thanks to a property crisis and increased regulation. The growth fears come amid China’s widening policy divergence with the U.S., which has led to foreign outflows and weighed on the yuan.
HERE WE GO. News that lockdowns were spreading to Beijing over the weekend triggered new worries and send stocks, commodities & the yuan tumbling this morning https://t.co/6wViXhSHab via @markets
— Catherine Ngai (@catkngai) April 25, 2022
The CSI 300 Index dropped as much as 2.7% to the lowest since June 2020, wiping out all the gains from that mid March pledge to stabilize markets. The onshore yuan dropped to the lowest levels since April 21 and WTI oil futures are now back below $100/bbl
— Catherine Ngai (@catkngai) April 25, 2022
Check out the photos in this story about Shanghai erecting metal barriers to reflect just how intense the curbs have been there. https://t.co/TIOIofK6L4
— Catherine Ngai (@catkngai) April 25, 2022
“There are concerns about the Covid situation in Beijing evolving into what happened in Shanghai with some prolonged lockdowns that bites the economy,” said Kevin Li, portfolio manager at GF Asset Management (Hong Kong) Ltd.
— Catherine Ngai (@catkngai) April 25, 2022
Iron ore and steel futures have slumped today on worries that Shanghai’s extended lockdown will hit demand.
Concerns that other parts of China, such as Beijing, could see similar curbs also hit metal prices.
Marketwatch has the details:
The most-traded September iron ore contract on the Dalian Commodity Exchange fell as much as 11% on Monday. They were recently 8.4% lower at 815.0 yuan ($125.35) a metric ton. Iron ore futures in Singapore also declined by as much as 11% in response to the negative sentiment and were recently 6.2% lower at $141.40 a ton.
The most actively traded October steel rebar futures contract on the Shanghai Futures Exchange fell 3.2% to CNY4,857 a ton.
“Intensifying risks presented in rising virus infections [are driving] a need to stay cautious,” said IG market strategist Yeap Jun Rong.
On Friday, Shanghai authorities announced that strict lockdown measures would continue until Covid-19 was eradicated, neighbourhood by neighbourhood, in a push to achieve “community zero-Covid as soon as possible.”
Oil prices tumbles 4%
Brent crude has fallen 4% this morning as concerns grow that China’s Covid-19 outbreaks will hit energy demand and economic growth.
The oil benchmark has fallen to $102.73 per barrel, its lowest in almost a fortnight.
US crude is also down 4%, back below $100 per barrel, as investors react to the prolonged Covid-19 lockdowns in Shanghai and the news of mass testing in Beijing’s largest district.
Oil is also being pulled lower by the prospect of interest rate rises this year as central bankers try to cool inflation.
Analyst Stephen Innes of SPI Asset Management explains:
Oil is rerating lower due to the China consumption hit while the Federal Reserve is raising interest rates to slow down the US economy. Those are two gusty headwinds suggesting some oil bulls will give way to recession fears and demand devastation.
Introduction: China lockdown worries hit markets
Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.
Stock markets are beginning the new week on the back foot amid anxiety over China’s Covid-19 lockdowns and the health of the global economy.
Growth fears are rising as authorities in Beijing began a mass testing push after a spike in Covid cases.
Around 3.5 million residents and workers in its biggest district, Chaoyang, must report for three coronavirus tests this week.
More than a dozen residential buildings were put under lockdown in Chaoyang, an affluent downtown area home to embassies and international businesses. Fears of a City-wide lockdown sent Beijingers racing to supermarkets to stock up on food today.
The city has also imposed tight entry controls, and some gyms and after-school activity providers have stopped in-person classes.
With Shanghai further tightening its restrictions on the movement of some residents in the financial hub last week, concerns that tough lockdowns could stall China’s recovery are growing. That would have a knock-on impact on the global economy, creating more supply chain disruption and hitting energy demand.
China’s stock market has taken a slide, with the benchmark CSI300 index tumbling 3.5% today to its lowest level since late May 2020.
Other Asia-Pacific markets have been hit too, with Hong Kong’s Hang Seng shedding 3.3%, Japan’s Nikkei down 1.5% and Australia’s S&P/ASX index losing 1.6%.
Commodities are weakening too, with iron ore prices falling and oil at a two-week low.
China faces a “rapidly deteriorating growth outlook amid zero-Covid restrictions”, says Alvin Tan, analyst at RBC Capital Markets.
The renminbi has come under further pressure overnight after news that a Beijing district has to undergo three days of Covid testing starting today, plus Shanghai entering a fourth week of lockdown. Crude oil, iron ore, and Chinese equities have all slumped.
European markets are set for a lower open, adding to last Friday’s losses, with the main indices down over 1% in pre-market trading.
Wall Street ended last week with a tumble, after Federal Reserve chair Jerome Powell said it was ‘absolutely essential,’ to tame inflation, and that the Fed could lift interest rates by 50 basis points in May.
Also coming up today…
The CBI’s latest industrial trends report will highlight the pressures on UK factories from rising costs, while the IFO institute will update us on Germany’s business confidence.
And Twitter has reportedly begun negotiations with Elon Musk after pressure from shareholders, after Musk disclosed details of how his $43bn acquisition offer would be finances.
Reuters reports:
The company’s decision to engage with Musk, taken earlier on Sunday, did not mean it would accept his $54.20 a share bid, the sources said. It signified, however, that Twitter was exploring whether a sale to Musk was possible on attractive terms.
Musk, chief executive of Tesla, has been meeting with Twitter shareholders in the last few days seeking support for his bid. He has said Twitter needs to be taken private to grow and become a genuine platform for free speech.
The agenda
- 9am BST: Ifo survey of Germany’s business climate in April
- 10am BST: Eurozone construction output report for February
- 11am BST: CBI’s industrial trends survey of UK factories in April
- 1.30pm BST: Chicago Federal Reserve’s national activity index
- 3.30pm BST: Dallas Federal Reserve manufacturing index