World markets shaken by Wall Street and China’s zero covid promise

Major European indices fell in early trading. Stocks in Asia followed, selling off as China’s pledge to stick to its zero-Covid policy stoked concerns about the world’s second-largest economy.
Hong Kong Hang Seng Index (HSI) fell 3.8%, leading losses in Asian markets and posting its worst daily decline in more than a month. Tech stocks saw a strong sell-off, with the Hang Seng Tech Index falling 5.2%.
mainland china landmark Shanghai Composite Index (SHCOMP) and its tech-heavy counterpart, the Shenzhen Component Index, both fell more than 2%. from Japan Nikkei (N225) opened lower but reversed losses later in the day. It ended up 0.7%.

In the foreign exchange markets, The Chinese yuan fell against the US dollar, reaching its lowest level in a year and a half years. He trimmed some afternoon losses to settle at 6.71 per US dollar.

In Europe, London FTSE100 (United KingdomX)index fell more than 1%. from Germany DAX (DAX)and from France ACC 40 (CAC40) they fell 1.4% and 1.6%, respectively. The pound, which lost 2% against the dollar on Thursday after the Bank of England predicted a hard landing for the UK economy, fell to $1.23.

The losses came after the Dow Jones dropped more than 1,100 points and the S&P 500 fell 3.7% on Thursday, negating Wednesday’s gains as investors worried about the impact of rising interest rates. in the United States and the risk of a recession.

investors People in Asia are also nervous after the latest comments from China’s top leaders about their efforts to stop the spread of the coronavirus.

President Xi Jinping said all levels of government must “resolutely” adhere to the country’s zero-COVID policy. He made the comments during a meeting Thursday with the Communist Party’s Politburo Standing Committee, the nation’s top decision-making body.

Officials at all levels of government should “resolutely fight any word or act that distorts, doubts and denies China’s covid control policy,” Xi said.

“That may serve to dampen some hopes of any Covid-19 policy change, suggesting the economic recovery will remain protracted and uneven,” Yeap Jun Rong, market strategist at financial services firm IG Group, wrote on Friday. .

China’s zero covid policy has taken a heavy toll on the country’s economy. In April, the giant services sector shrank at the second-fastest pace on record as the Covid-19 lockdowns hit businesses hard. China’s manufacturing sector also shrank last month, pushing the economy back.

— Nicole Goodkind contributed to this report.

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