- China announces record number of new local COVID cases
- Commodities were sold due to demand concerns
- Dollar Slips Against Yen, Swiss Franc
NEW YORK/ LONDON, Nov 28 (Reuters) – U.S. stocks trailed a drop in global stocks and oil sold Monday as rare protests in major Chinese cities against the country’s strict zero-COVID restrictions fueled concerns about global economic growth .
A spate of COVID cases and clashes between police and protesters in several major Chinese cities over the weekend also helped lower US Treasury yields and even safe haven assets like the dollar and gold were in the red.
“There are concerns about the increasing number of COVID cases in China and how the government will respond. We have moved from what we viewed as a reopening to likely greater restrictions,” said Matthew Miskin, co-chief investment strategist at John Hancock Investment Management .
“If one of the largest economies goes offline, it will weigh on global growth. It will affect all companies in one way or another.”
The Dow Jones Industrial Average (.DJI) fell 192.36 points, or 0.56%, to 34,154.67, the S&P 500 (.SPX) lost 30.51 points, or 0.76%, to 3,995.61 and the Nasdaq Composite (.IXIC) fell 90.21 points, or 0.8%, to 11,136.14.
The pan-European STOXX 600 index (.STOXX) was down 0.50% and the MSCI index of equities around the world (.MIWD00000PUS) was down 0.71%.
Emerging market equities (.MSCIEF) fell 0.94%. MSCI’s broadest index of Asia-Pacific stocks outside of Japan (.MIAPJ0000PUS) closed 1.1% lower, while Japan’s Nikkei (.N225) lost 0.42%.
Oil prices, sensitive to the severity of China’s lockdown as a demand barometer, offset some losses, but previously US crude had fallen to its lowest level since late December 2021. Brent crude, after falling to its lowest level since early January, it last traded at $82.49, down 1.36% on the day. US crude fell 0.93% to $75.57 a barrel.
In currency, the safe-haven Swiss franc and Japanese yen gained, while the Aussie dollar and Chinese yuan underperformed. The US dollar, meanwhile, fell, which analysts say was unusual given its typical safe haven role.
“It might suggest that the swing against the dollar in terms of the broader market mood or positioning this morning might be going a bit deeper and that could be significant,” said Shaun Osborne, chief FX strategist at Scotiabank in Toronto, Canada. said.
The dollar’s movement led some market analysts to blame falling US bond yields, making the greenback less attractive against the Japanese currency.
The dollar index fell by 0.292%, the euro rose by 0.13% to $1.0409. The Japanese yen was up 0.28% against the greenback at 138.71 to the dollar, while the pound last traded at $1.2044, down 0.41% on the day.
The dollar fell 0.4% against the Swiss franc, after falling as much as 0.77% earlier.
In Treasuries Benchmark 10-year bonds fell 2.8 basis points to 3.674%, from 3.702% late Friday.
The 30-year bond fell 2.7 basis points to 3.725%, from 3.752%, while the 2-year bond fell 3.9 basis points to 4.4402%.
Fears about Chinese economic growth hit other commodity markets, while copper and other metals also fell.
Concerns over China’s COVID policy eclipsed any support from China’s central bank’s reserve requirement ratio (RRR) announced Friday cut by 25 basis points, freeing up about $70 billion to support a faltering economy.
China had announced a record number of new local COVID cases on Monday for a fifth consecutive day with 40,052 infections, as protesters and police in Shanghai clashed on Sunday night as protests flared for a third day.
There were also protests in Wuhan, Chengdu and parts of the capital Beijing as COVID restrictions were put in place.
The gold price gave up gains after hitting a one-week high of $1763.70 an ounce. Spot gold fell 0.5% to $1,748.07 an ounce.
Reporting Sinéad Carew and Karen Brettell in New York, Lawrence White in London, Scott Murdoch in Sydney; Edited by Barbara Lewis, Chizu Nomiyama and Susan Fenton
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