Global markets plummeted by Wall Street and China’s zero-Covid pledge

Major European indices fell in early trading. They followed shares in Asia, which sold out as China’s promise to stick to its zero-Covid policy raised concerns about the world’s second largest economy.
Hong Kongs Hang the Bed Index (HSI) fell 3.8%, leading to losses in Asian markets and recording its worst daily decline in more than a month. Tech shares so strong sales, with the Hang Seng Tech index down 5.2%.
Mainland China Reference Index Shanghai Composite Index (SHCOMP) and its technology-heavy peer Shenzhen Component Index both fell more than 2%. Japanese Nikkei (N225) opened lower but reversed losses later in the day. It ended up 0.7 percent.

In foreign exchange markets, the Chinese yuan fell against the US dollar, hitting its lowest level of one and a half year. It reduced some losses in the afternoon to 6.71 per US dollar.

In Europe, London FTSE 100 (UKX)the index fell more than 1%. Of Germany DAX (DAX)and France CAC 40 (CAC40) 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 British economy, fell to $ 1.23.

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

Investors in Asia are also nervous after the recent comments from China’s top management about their efforts to stop the spread of the coronavirus.

President Xi Jinping said that all levels of government “resolutely” must follow the country’s zero-Covid policy. He made the remarks during a meeting on Thursday with the Communist Party’s standing committee in the Politburo – the country’s highest decision – making body.

Officials at all levels of government should “resolutely fight with all words and actions that distort, doubt and deny China’s Covid control policy,” Xi said.

“It may serve to dampen any hopes of any Covid-19 policy shift, suggesting that economic recovery will remain protracted and erratic,” Yeap Jun Rong, a marketing strategist at 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 declined at the second sharpest pace ever recorded when Covid shutdowns hit companies hard. China’s manufacturing sector also shrank last month, sending the economy back.

– Nicole Goodkind contributed to this report.

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