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

by WOOWinvest
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Traders work on the floor of the New York Stock Exchange (NYSE) on April 28, 2022 in New York City.

Major European stock indexes fell in early trade. They focused on Asian stocks, which sold off as China’s pledge to stick to its zero-coronavirus policy sparked concerns about the world’s second-largest economy.
Hong Kong’s Hang Seng Index (HSI) It tumbled 3.8%, leading Asian markets to its biggest one-day drop in more than a month. Technology stocks suffered a sharp sell-off, with the Hang Seng Technology Index down 5.2%.
Benchmark in Mainland China Shanghai Composite (Shanghai Composite Index) Its tech-heavy peers, the Shenzhen Component Index, all fell more than 2 percent.Japan’s Nikkei (N225) It opened lower but reversed losses later in the day. It ended up 0.7% higher.

In currency markets, the yuan fell to its lowest level in a year and a half against the dollar. It recovered some of its losses in the afternoon to settle at $6.71 per dollar.

in Europe, London FTSE 100 (UKX)The index fell more than 1%.German Dax (Dax)and French CAC 40 (CAC40) Down 1.4% and 1.6%, respectively. Sterling fell 2% to $1.23 on Thursday after the Bank of England forecast a hard landing for the UK economy.

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

Investors in Asia were also jittery following the latest comments from China’s top leadership on its efforts to stem the spread of the coronavirus.

President Xi Jinping said governments at all levels must “resolutely” adhere to the country’s zero epidemic policy. He made the remarks at a meeting on Thursday with members of the Politburo Standing Committee, China’s top policy-making body.

Government officials at all levels must “resolutely oppose any words and deeds that distort, question and deny China’s epidemic prevention and control policies,” Xi said.

“This could dampen some hopes for a Covid-19 policy shift that suggests the economic recovery will be long and uneven,” Yeap Jun Rong, market strategist at financial services firm IG Group, wrote on Friday.

China’s zero-virus policy has dealt a heavy blow to the country’s economy. The sprawling services sector contracted at the second-fastest pace on record in April as Covid lockdowns hit businesses hard. Manufacturing in China also shrank last month, sending the economy into a tailspin.

— Nicole Goodkind contributed to this report.

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