Covid Intensifies in China, Oil Prices Damaged
News about Covid have taken a backseat due to recent global developments, but that doesn’t mean the pandemic is over. Namely, Shanghai has seen a new surge of the virus, threatening a massive spread. The particularly dangerous thing about the infection increase is that most of the infected seem to be asymptomatic. That means the situation may be even worse, with asymptomatic people not being aware they should be tested.
As a precaution, Shanghai decided to enact a two-stage lockdown as a preventative measure. During the lockdown, the city will do sweeping Covid tests in order to estimate the degree of concern. To reduce the length of the lockdown, the government decided to split the city into two areas. One will be to the Huangpu River’s east and the other to the west.
The east area will be the first to get quarantined, with the lockdown lasting from March 28 to April 1. After that, the plan is to test the west area between April 1 and 5.
During the lockdown, factories will stop production or do whatever work they can remotely. Naturally, that excludes crucial public services and food manufacturers. Unverified vehicles, including ride-sharing services and public transport, will be banned from the streets. The new testing effort is a result of a month-long Covid resurgence.
The panic the possible intensification of Covid and the production hitch have brought on has also reflected on global markets. Next, we’ll look at what got most severely impacted.
How Are Global Markets Doing?
Given that Chins is the world’s biggest oil importer, it’s quite understandable that brent reacted immediately. It shed $4.35, dropping to $116.33, which is about 4%. US crude went on a nearly identical spin, losing $4.5 and ending up at $109.38. Gold has also displayed a modest drop, equaling about 1.13%.
Another declining security was unsurprisingly China’s leading index, the CSI 300. It declined by 0.6%, which, while significant, isn’t a massive decline.
Namely, amid the Covid news, Japan seems to be having its own separate struggle. The yen, one of the world’s leading currencies, slipped a significant 1.5% during a single day. Mirroring that, Nikkei 225 also slid 0.7%, worse than the lockdown-afflicted Chinese index. The daily drop shouldn’t worry investors too much, as Nikkei’s monthly performance has been stellar.
Ten-year U.S. Treasury yields have soared above 2.5% in new FED forecasts. As of now, the yields stand at 2.75% and are poised to soar again in the future. Some analysts expect numbers as high as 3.75% in 2023.
Surprisingly, Wall Street was fairly unfazed by the news, with a fairly standard day. While there was some fluctuation in index value, most remained relatively flat, marking an uneventful day.
Europe seems to be most resilient to all the news going on around it. While Asia seems ready for a slide and the US remains unmoved, the Stoxx index marked significant growth. The European stock compendium managed to jump 1.16% and is on route to recovering from its early march plummet.