Stocks and oil fall on China coronavirus fears

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Equities and crude oil fell on Thursday as investors worried about the impact of a surge in coronavirus cases in China on the global economy, just as the country eases its tough pandemic policies.

The benchmark Hang Seng stock index was down 0.8 per cent, while China’s blue-chip CSI 300 index fell 0.4 per cent as major cities across China were faced with a surge in Covid-19 cases.

In Europe, the benchmark Stoxx 600 was down 0.4 per cent in thin trading. The commodities-heavy FTSE 100 fell 0.6 per cent, led by declines for oil majors Shell and BP, down 1.2 per cent and 1.5 per cent respectively.

In commodities markets Brent crude, the international oil benchmark, slid 1.9 per cent while WTI, the US counterpart, fell 2.4 per cent.

Thursday’s declines come after China’s National Health Commission said it would drop quarantine requirements for inbound passengers from January 8, even as the country endures its worst Covid outbreak.

The announcement was the latest easing of the government’s punishing zero-Covid policies, which have hit economic growth.

A growing number of countries, including the US and Italy, have announced that they will require negative Covid tests for air passengers travelling from China.

Hong Kong also further eased its pandemic restrictions on Wednesday, scrapping PCR tests upon arrival to the Asian financial hub, as well as limits on dining in restaurants.

The Hang Seng Tech index was down 2.5 per cent after the Nasdaq Golden Dragon index, which tracks Chinese tech groups trading in the US, closed on Thursday down more than 3.8 per cent.

On Wednesday, Wall Street’s benchmark S&P 500 fell 1.2 per cent, while the tech-heavy Nasdaq Composite dropped 1.4 per cent.

The yield on the 10-year US government bond fell 0.04 percentage points to 3.84 per cent. Yields fall when prices rise.

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