Stocks fell while the dollar and treasuries rose, as growing unrest in China over coronavirus restrictions spooked global markets.
Chinese stocks led the stock market declines, with weakness also evident in Australia, Japan and South Korea.
Protests erupted across China and spread to several cities in the wake of a fire that killed people in Urumqi, in the far west of the country, as hundreds of demonstrators and police clashed in Shanghai on Sunday evening.
US stock futures fell as the decline in shoppers’ movement with heavy discounts by US retailers in Friday’s cuts contributed to pessimism.
Resorting to safe havens
China’s developments have halted the decline in the dollar, which had fallen over the past few weeks, on the hope that the US Federal Reserve will soon slow down the pace of interest rate hikes, a view endorsed by the Fed’s November meeting minutes published last week.
The US currency rose amid the trend towards a safe haven, as it rose against the currencies of Australia and South Africa. The yuan fell in the local market by 1% before paring losses.
Resorting to safe havens did not rise in gold, as the strength of the dollar led to a marginal decline in the prices of the precious metal.
Treasuries rose, led by a rise in Australian and New Zealand government bonds. Meanwhile, the cost of insuring dollar bonds for the Asia region excluding highly rated Japan against default, is set for its first increase in five days.
Gabrielle Wildau, managing director at Teneo Holdings in New York: “The markets will be negatively impacted by large-scale protests and rising case numbers, which is likely to lead to new disruptions to supply chains and shrink demand for commodities, at least in the long term. short.”
Oil fell to its lowest level since last December, as the turmoil hurt investors’ risk appetite and negatively affected the outlook for energy demand, adding to pressures in the already weak oil market.