Covid has returned to haunt global markets with oil and gold prices slumping sharply after China reversed course and revealed a 9-day lockdown of its biggest city, Shanghai.
That triggered expectations for weaker demand as China placed lockdown measures on Shanghai to combat rising Covid-19 infections which offset supply concerns as Russia’s war on Ukraine continues.
The lockdown decision came only a day after the government decided against this course of action and claimed to be able to test and control the outbreak.
But it is far more serious than the official figures are showing and the surge in asymptomatic cases forced the change of mind within a day and the two-stage lockdown for the huge city (which has almost as many people as the entire Australian population.
High profile US electric car maker Tesla was forced to extend its shutdown from a day to at least four.
That saw the China-sensitive Aussie dollar dip back under 75 US cents to around 74.90 and US 10-year bond yield eased to just over 2.45% from nearly 2.48% late Friday.
Oil prices were hit hard by the Shanghai lockdown news from China with West Texas Intermediate (WTI) down 7% on Monday to settle at $US105.96 a barrel. It fell further in late trading and was around $US103 in early Asian dealings.
May Brent crude, the global benchmark, was down nearly 7% to US$112.35.
Comex gold settled down 0.7% around $US1,939 an ounce and continued falling lower in late trading to be around $US1,919 an ounce – off 1.8%.
Comex silver, and copper also fell while palladium lost 8%.
Wall Street shares ignored the upsurge in Covid cases in China and ended higher after being in the red for much of the session.
The Dow rose 94.65 points to 34,955.89; the S&P 500 added 0.7% to 4,575.52 and Nasdaq was up 1.3% to 14,354,90, thanks to a 8% jump in Tesla shares on shareholders voting to split the shares. They ignored news the electric carmaker had been forced to close its huge factory in Shanghai for at least four days because of surging Covid infections.
The S&P 500 hit its high of the session as crude oil hit its low of the day, down more than 11% at $US102.83 a barrel.
The falls in commodities came as China announced it will impose at least 8 days of lockdowns on Shanghai, a city of 26 million and one of the country’s most important commercial centres.
Half the city will be quarantined for four days for Covid testing, followed by a four-day closure of the second half. The lockdowns are expected to cut demand from the world’s largest oil importer as it continues the zero Covid-19 policy first imposed in January, 2020, when the coronavirus first emerged in Wuhan.
“Today’s price slide is attributable first and foremost to concerns about demand now that the Chinese metropolis of Shanghai has entered into a partial lockdown that is scheduled to last for a total of eight days in an attempt to curb the further spread of coronavirus.
“This is also prompting growing concerns that China’s strict zero-Covid policy will lead to repeated lockdowns in key business centres, which is unlikely to lead oil demand in China unscathed,” Commerzbank analyst Carsten Fritsch said in a note.
That zero Covid policy has been abandoned as the Chinese government utilises voluntary Rapid Antigen Tests as well as PCR testing and temperature checks to try and fight soaring numbers of asymptomatic cases.
Wu Fan, a member of Shanghai’s expert COVID team, told a briefing on Sunday that recent mass testing had found “large scale” infections throughout the city, triggering the stronger response than outlined on Saturday when the city decided not to lockdown.
“Containing the large-scale outbreak in our city is very important because once infected people are put under control, we have blocked transmission,” she said, adding that testing would be carried out until all risks were eliminated.
A record 3,450 asymptomatic COVID cases were reported in Shanghai on Sunday, accounting for nearly 70% of the nationwide total, along with 50 symptomatic cases, the city government said.
Nationwide, there were 5,134 new asymptomatic and 1,219 symptomatic cases on Sunday, China’s national health authority said in its regular bulletin.
The Chinese government doesn’t count asymptomatic cases as having being infected because they do no exhibit symptoms as those classified as ’symptomatic.’ There were 4,333 asymptomatic cases in Shanghai on Saturday and 1,217 symptomatic cases.
That’s a total of 6,353 cases (symptomatic and asymptomatic) on Sunday, up from 5,550 on Saturday.
The worsening Covid infections in Shanghai has forced Tesla, the US electric vehicle maker, to extend the suspension production at its huge car plant in the city to four days after an initial decision to halt for a day.
The longer suspension followed a move by the city’s government to lockdown parts of the city, for up to nine days a day after it said it wouldn’t.
It’s clear the Covid infections in the huge city of 24 million people is worse than though and indeed Reuters reported a senior government official as saying that large scale infections had been found throughout the city – as shown by the rise in cases of people not showing symptoms but who are clearly carrying the virus.
State media reported that national and city officials had moved to ensure enough food and other consumables were available for people in the huge city for the next 9 to 10 days.
Global Times newspaper reported that there were numerous videos on line showing people in the city panic buying (‘rushing’) since last Tuesday when the infections started rising rapidly. Long lines were reported outside food stores and supermarkets.
The high profile uS electric car maker, Tesla was forced to extend its shutdown from a day to at least four.
That saw the China-sensitive Aussie dollar dip back under 75 US cents to around 74.90 and US 10-year bond yield eased to just over 2.45% from nearly 2.48% late Friday.
Oil prices were hit hard by the Shanghai lockdown news from China with West Texas Intermediate (WTI) down 7% on Monday to settle at $US105.96 a barrel. It fell further in late trading and was around $US103 in early Asian dealings.
May Brent crude, the global benchmark, was down nearly 7% to US$112.35.
Comex gold settled down 0.7% around $US1,939 an ounce and continued falling lower in late trading to be around $US1,919 an ounce – off 1.8%.
Comex silver, and copper also fell while palladium lost 8%.
Wall Street shares ignored the upsurge in Covid cases in China and ended higher after being in the red for much of the session.
The Dow rose 94.65 points to 34,955.89; the S&P 500 added 0.7% to 4,575.52 and Nasdaq was up 1.3% to 14,354,90, thanks to a 8% jump in Tesla shares on shareholders voting to split the shares. They ignored news the electric carmaker had been forced to close its huge factory in Shanghai for at least four days because of surging Covid infections.
The S&P 500 hit its high of the session as crude oil hit its low of the day, down more than 11% at $US102.83 a barrel.
The falls in commodities came as China announced it will impose at least 8 days of lockdowns on Shanghai, a city of 26 million and one of the country’s most important commercial centres.
Half the city will be quarantined for four days for Covid testing, followed by a four-day closure of the second half. The lockdowns are expected to cut demand from the world’s largest oil importer as it continues the zero Covid-19 policy first imposed in January, 2020, when the coronavirus first emerged in Wuhan.
“Today’s price slide is attributable first and foremost to concerns about demand now that the Chinese metropolis of Shanghai has entered into a partial lockdown that is scheduled to last for a total of eight days in an attempt to curb the further spread of coronavirus.
“This is also prompting growing concerns that China’s strict zero-Covid policy will lead to repeated lockdowns in key business centres, which is unlikely to lead oil demand in China unscathed,” Commerzbank analyst Carsten Fritsch said in a note.
That zero Covid policy has been abandoned as the Chinese government utilises voluntary Rapid Antigen Tests as well as PCR testing and temperature checks to try and fight soaring numbers of asymptomatic cases.
Wu Fan, a member of Shanghai’s expert COVID team, told a briefing on Sunday that recent mass testing had found “large scale” infections throughout the city, triggering the stronger response than outlined on Saturday when the city decided not to lockdown.
“Containing the large-scale outbreak in our city is very important because once infected people are put under control, we have blocked transmission,” she said, adding that testing would be carried out until all risks were eliminated.
A record 3,450 asymptomatic COVID cases were reported in Shanghai on Sunday, accounting for nearly 70% of the nationwide total, along with 50 symptomatic cases, the city government said.
Nationwide, there were 5,134 new asymptomatic and 1,219 symptomatic cases on Sunday, China’s national health authority said in its regular bulletin.
The Chinese government doesn’t count asymptomatic cases as having being infected because they do no exhibit symptoms as those classified as ’symptomatic.’ There were 4,333 asymptomatic cases in Shanghai on Saturday and 1,217 symptomatic cases.
That’s a total of 6,353 cases (symptomatic and asymptomatic) on Sunday, up from 5,550 on Saturday.
The worsening Covid infections in Shanghai has forced Tesla, the US electric vehicle maker, to extend the suspension production at its huge car plant in the city to four days after an initial decision to halt for a day.
The longer suspension followed a move by the city’s government to lockdown parts of the city, for up to nine days a day after it said it wouldn’t.
It’s clear the Covid infections in the huge city of 24 million people is worse than though and indeed Reuters reported a senior government official as saying that large scale infections had been found throughout the city – as shown by the rise in cases of people not showing symptoms but who are clearly carrying the virus.
State media reported that national and city officials had moved to ensure enough food and other consumables were available for people in the huge city for the next 9 to 10 days.
Global Times newspaper reported that there were numerous videos on line showing people in the city panic buying (‘rushing’) since last Tuesday when the infections started rising rapidly. Long lines were reported outside food stores and supermarkets.
