BANGKOK — Hong Kong’s stock index plunged 5.4% on Monday after the neighboring Chinese city of Shenzhen was ordered to shut down to battle China’s worst COVID-19 outbreak in two years.
Shares were mixed elsewhere in Asia. European stocks and US futures rose and oil prices fell.
Amid the uncertainty of the war in Ukraine, Chinese stocks came under selling pressure due to the threat of delisting of major Chinese companies from US stock exchanges.
A vital manufacturing and technology center of 17.5 million people, Shenzhen is home to some of China’s most important companies, including telecommunications equipment maker Huawei Technologies Ltd., electric car brand BYD Auto, Ping An Insurance Co. and Tencent Holding, operator of the popular WeChat messaging service.
The spread of coronavirus outbreaks in China is also adding to concerns about supply chain disruptions.
Hong Kong’s benchmark Hang Seng index regained some lost ground to fall 5% to 19,531.66. The stock market’s technology index fell 11%.
The Shanghai Composite Index slipped 2.6% to 3,223.53. The Shenzhen Small Market A-share index lost 2.9%.
Authorities restricted access to Shenzhen by suspending bus service and said everyone in the city would undergo three rounds of testing after 60 new cases were reported on Sunday. All businesses except those providing food, fuel and other necessities have been ordered to close or work from home.
The number of infections in mainland China is low compared to other countries and Hong Kong, which reported more than 32,000 new cases on Sunday. But Beijing’s “zero tolerance” strategy has led to lockdowns of entire cities to find and isolate every infected person.
In other Asian markets, Tokyo’s Nikkei 225 rose 0.6% to 25,307.85 and Australia’s S&P/ASX 200 gained 1.2% to 7,149.40. The South Korean Kospi fell 0.6% to 2,645.65.
The Ukrainian crisis and the central bank’s efforts to fight inflation remain the focus of most investors’ concerns.
The Federal Reserve is due to hold a policy meeting this week, and “markets are bracing for two diametrically opposed forces,” Mizuho Bank said in a commentary. “One is geopolitical uncertainty that can trigger further ‘risk’ convulsions and the other is a hawkish Fed that is poised to raise ‘interest rates by at least 0.25 percentage points. .
Ukrainian President Volodymyr Zelenskyy has pledged to continue negotiations with Russia after talks aimed at reaching a ceasefire on Saturday broke down.
The broadening of Russia’s offensive into western Ukraine comes amid warnings of the growing impact of the conflict. Moody’s Investor Service said it was revising its credit ratings for both countries in light of rising security, economic and financial risks.
On Friday, the S&P 500 fell 1.3% to 4,204.31. The Dow Jones Industrial Average fell 0.7% to 32,944.19, while the Nasdaq Composite Index fell 2.2% to 12,843.81. The Russell 2000 Small Business Index slid 1.6% to 1,979.67.
Global markets have been rocked by dramatic reversals as investors struggle to guess how Russia’s invasion of Ukraine will affect the prices of oil, wheat and other commodities produced in the region.
This increases the risk that the US economy will be grappling with a toxic combination of persistently high inflation and stagnant growth. The Federal Reserve is expected to raise interest rates at its meeting this week as it and other central banks move to stamp out the highest inflation in generations, while trying to avoid triggering a recession raising rates too high or too quickly.
Amid all the uncertainty, US stocks remain around 10% below their peak from earlier this year, while crude oil prices remain more than 40% higher for 2022 so far.
Benchmark U.S. crude oil fell $3.07 to $106.26 a barrel in electronic trading on the New York Mercantile Exchange. It jumped $3.31 a barrel on Friday to $109.33 a barrel.
Brent crude, the standard for international prices, fell $2.45 to $110.22 a barrel.
The US dollar fell from 117.35 yen to 117.80 Japanese yen. The Euro strengthened to $1.0945 from $1.0926.