NEW YORK, November 21. (Reuters) – Global stocks and oil prices fell on Monday as a spike in COVID-19 cases and new deaths in China prompted authorities to re-impose lockdowns in the world’s second-largest economy, sparking worries about the impact on the economy.
Beijing’s most populous district urged residents to stay at home on Monday as the city saw a spike in COVID-19 cases and at least one district in Guangzhou was locked down for five days.
“It seemed like zero COVID was moving in the right direction and everyone was excited, but the Chinese government is taking decisive action and there will be attacks in the near future,” said Thomas Hayes, chairman of Great Hill Capital in New. York.
MSCI’s broadest index of world shares (.MIWD00000PUS) fell 0.92%, while European shares (.STOXX) were flat.
On Wall Street, all three major indexes were lower, led by a selloff in technology, energy and consumer picks stocks.
The Dow Jones Industrial Average (.DJI) fell 0.29% to 33,646.88, the S&P 500 (.SPX) lost 0.58% to 3,942.36 and the Nasdaq Composite (.IXIC) fell 1.16% to 11,017,017.
Oil prices fell to their lowest level since early January on concerns that China’s fuel demand has weakened due to the COVID-19 lockdown, as well as reports that Saudi Arabia and other OPEC members are in talks over a possible production increase.
Brent crude futures for January fell 5.32% to $75.82 a barrel, while U.S. West Texas Intermediate (WTI) crude futures for December fell 5.19% to $83.07.
“There’s always a supply and demand picture with oil, and right now the market is looking for insight into demand,” said Cliff Hodge, chief investment officer at Cornerstone Wealth in Charlotte, North Carolina.
“Typically, oil demand will be down a lot because of a slowdown or a global recession, especially this year, which we think will be a little bit boosted by China,” Hodge added.
The US dollar rose against most major currencies, recovering recent losses as traders shunned riskier currencies on concerns about the global economic outlook due to the COVID-19 curbs in China. The dollar index rose 0.926%, while the euro fell 0.87% to $1.0234.
Longer-term U.S. Treasury yields edged lower at the start of the Thanksgiving holiday week as data showed the U.S. economy was slowing. The 10-year yield fell to 3.8119%, while the 30-year Treasury yield fell to 3.8961%.
Gold prices fell to their lowest level in a week as the dollar rallied and market attention shifted to the minutes of the US Federal Reserve’s November meeting, due to be released this week.
Spot gold was down 0.8% at $1,735.89 an ounce, while U.S. gold futures were down 0.90% at $1,736.10 an ounce.
Reporting by Chibuike Oguh in New York Editing by Deepa Babington and Chris Reese
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