Global stocks, oil prices slip as rising COVID cases prompt Chinese lockdowns

  • China reports 26,824 cases of Covid-19 and two deaths
  • Oil prices fell by 5%
  • Wall Street stocks are falling
  • The rise of the US dollar
  • Benchmark 10 yield decline

NEW YORK, Nov 21 (Reuters) – Global stocks and oil prices fell on Monday as a surge in COVID-19 cases and recent deaths in China prompted authorities in the world’s second-largest economy to renew a lockdown, raising concerns about the impact on the economy.

Beijing’s most populous district urged residents to stay at home on Monday as the number of COVID cases in the city rose, while at least one district in Guangzhou was locked down for five days.

“It looked like zero COVID was going in the right direction and everyone was excited, but the Chinese government is getting tough and there will be fits and starts in the short term,” said Thomas Hayes, Great Hill Capital in New. York.

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MSCI’s broadest index of world shares (.MIWD00000PUS) fell 0.92%, while European shares (.STOXX) were flat.

On Wall Street, all three major indexes traded lower, led by a sell-off in technology, energy and consumer discretionary stocks.

The Dow Jones Industrial Average (.DJI) fell 0.29% to 33,646.88, the S&P 500 (.SPX) lost 0.58% to 3,942.36 and the Nasdaq Composite (.IXIC) lost 1.16% to 11 017.017.

Oil prices hit their lowest level since early January on concerns that China’s demand for the fuel will fall due to the COVID-19 lockdown, as well as reports that Saudi Arabia and other OPEC members are in talks over a possible production increase.

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Brent crude futures fell 5.32% to $75.82 a barrel in January, while US West Texas Intermediate (WTI) crude futures fell 5.19% to $83.07 in December.

“There’s always a supply and demand picture with oil, and right now the market is looking for insight on the demand side,” said Cliff Hodge, chief investment officer at Cornerstone Wealth in Charlotte, North Carolina.

“Typically, oil demand will fall sharply when you enter a recession or a global recession, especially this year, which we think China will exacerbate a little bit,” Hodge added.

The US dollar rose against most major currencies, recovering recent losses as traders avoided riskier currencies amid concerns about the outlook for the global economy amid China’s containment of COVID-19. The dollar index increased by 0.926%, while the euro rate decreased by 0.87% to 1.0234 dollars.

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Longer-term U.S. Treasury yields edged lower at the start of the Thanksgiving-shortened week amid data that suggested the U.S. economy was slowing. The yield on the 10-year note fell to 3.8119%, while the yield on the 30-year Treasury fell to 3.8961%.

Gold prices fell to their lowest level in more than a week as the dollar rallied as markets focused on this week’s minutes from the US Federal Reserve’s November meeting.

Spot gold was down 0.8% at $1,735.89 an ounce, while U.S. gold futures were down 0.90% at $1,736.10 an ounce.

Reporting by Chibuike Oguh in New York Editing by Deepa Babington and Chris Rees

Our Standards: The Thomson Reuters Trust Principles.

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