Sharp falls in oil and stock markets are caused by the China COVID crisis.

Sharp falls in oil and stock markets are caused by the China COVID crisis.

High falls in oil prices and escalating COVID lockdowns in China on Monday both contributed to a recent relaxation in oil prices and sharp drops in stock markets throughout Asia.

 

China COVID crisis.
China COVID crisis.

Investors were concerned about demand in the second-largest economy in the world and the effect of escalating lockdowns on economic growth, which sent the price of Brent crude futures down 3% on the day to $81 a barrel.

The Hang Seng Index in Hong Kong fell by more than 4% in the start before settling down by roughly 2%.

Even though China’s central bank took action on Friday to increase market liquidity, equity markets throughout Asia were largely lower, with the CSI300 Index down about 2%.

Yuan declined as well.

The commodities-heavy FTSE 100 declined by 0.8% as a result of the bad attitude spreading to Europe at opening.

Market analysts have expressed concerns that the demonstrations and China’s zero-COVID policy may do more economic harm than initially thought.

According to an OECD estimate released earlier this month, China’s economic growth will drop to 3.3% in 2022 from a previous year’s rate of 8.1%.

Beijing anticipated a 5.5% rate of growth at the beginning of 2022.

COVID-19

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