(Paris) The upsurge in COVID-19 cases in China and its economic consequences worried markets, which retreated in Asia and Europe on Tuesday, while remaining focused on the talks between Ukraine and Russia.
Posted at 7:08
Undermined by a sharp decline in shares of the technology sector, the Hong Kong Stock Exchange plunged by 5.72% and that of Shanghai by 4.95%.
In Europe, the indices opened lower and sank around 5:05 a.m., Paris losing 2.53%, Frankfurt 2.49%, Milan 2.08%. London fell 1.60%, despite a decline in the unemployment rate to 3.9% at the end of January, returning to its pre-pandemic level.
The day before on Wall Street, the Dow Jones index stagnated and the NASDAQ dropped more than 2%.
For its part, the Tokyo Stock Exchange stagnated at 0.15%.
Faced with a record number of daily COVID-19 cases in China, authorities locked down several cities and regions, including the tech capital Shenzhen, shutting down many factories like those of Apple’s supplier, electronics maker Foxconn.
Fears spread to the crude oil market: around 09:05 GMT, the benchmark price of a barrel in the United States, WTI, fell by more than 5%, dropping to 97.41 dollars, below the 100 dollar mark. , a week after hitting its highest level since 2008 due to Russia’s invasion of Ukraine.
The barrel of Brent from the North Sea for delivery in May fell 5.62% to 100.90 dollars.
With China being the largest importer of crude oil in the world, the quarantines represent a shortfall for the demand for black gold.
“The new containment measures will continue to aggravate supply chain disruptions and add to inflation concerns,” said Ipek Ozkardeskaya, analyst at SwissQuote.
While “the fall in oil prices is for sure a relief for inflation forecasts”, she adds.
An unexpected rebound of 6.7% in retail sales in China, however, allowed a slight recovery mid-session in Chinese markets.
Chinese stock markets were also penalized by American concerns about Beijing’s possible support for Russia. China’s foreign minister said on Tuesday that “China is not a party to the (Ukrainian) crisis and even less wants to be affected by the sanctions.”
The war in Ukraine continues to focus the attention of European markets, which hope during each session of talks that a ceasefire between Russia and Ukraine will be negotiated.
But the Russian army is stepping up its offensive in Ukraine. In particular, shots hit a residential building in Kyiv on Tuesday morning, killing at least two people.
The markets are also impatiently awaiting the conclusions of the monetary policy meeting of the American central bank (Federal Reserve, Fed), which begins on Tuesday.
The Fed is expected to raise its key rate by a quarter of a point and “it will certainly not be the last (rise) as market activity suggests another 6 to 7 rate hikes for the next twelve months in the United States” , notes Ipek Ozkardeskaya.
Chinese technology targeted
Investors are also worried about a harsh Chinese government takeover of thriving tech companies.
In Hong Kong, Tencent lost 10.19%, Baidu 7.49%, Alibaba 11.93% and JD.com 10.06%.
The luxury touched
As China is one of the main markets for luxury companies, the authorities’ containment measures are raising fears of a drop in revenues for the sector.
In Paris, Kering lost 4.45%, LVMH 4.19% and Hermès 4.26%. In Zurich, Richemont dropped 4.74% and Swatch 5.50%. In Milan, Tod’s yielded 4.03%.
The European Union also announced on Friday that it would ban luxury goods exports to Russia.
On the side of the euro and bitcoin
Around 5 a.m., the euro was trading at $1.0999, up 0.54% from the previous day’s close.
Bitcoin fell slightly (-0.87%) to $38,385.