Asian markets fall after zero-Covid protests reported in China

Stocks and oil declined in early trading on Monday

A protester shouts slogans against China's strict zero-Covid measures in Beijing. Getty Images

Stocks and oil fell on Monday as protests in China against zero-Covid restrictions spread to major cities, including Shanghai, in the world’s second-largest economy.

Oil benchmarks fell more than 2 per cent, while stocks and equity futures also dropped.

MSCI's broader index of Asia-Pacific shares had declined 0.45 per cent at 9am UAE time, pulled lower by Chinese markets.

Hong Kong's Hang Seng Index dropped 2 per cent, while China’s Shanghai Composite Index dipped more than 1 per cent.

Both indexes recovered some ground after heavy losses earlier in the day Hang Seng dropped more than 4 per cent during early trade. Korea Stock Exchange KOSPI Index declined 1.1 per cent.

S&P futures were down 0.6 per cent, while Nasdaq 100 Future and FTSE 100 Index Futures were down 0.8 and 0.4 per cent, respectively, pointing to potential declines when markets in Europe and US open for trading.

China’s economic activity fell in November and could drop further in the coming weeks as Covid outbreaks are reported across the country.

Bloomberg’s aggregate index of eight early indicators showed a probable contraction in activity this month.

The prospect of a slowing Chinese economy triggered demand concerns in the world’s biggest crude importer, pushing oil to the lowest level since December.

Brent, the benchmark for two thirds of the world’s oil, fell 2.91 per cent to $81.23 per barrel. West Texas Intermediate, which tracks US oil, slumped 3 per cent to $74 per barrel.

The People’s Bank of China on Friday said it will reduce the reserve requirement ratio for banks by 25 basis points. That would inject 500 billion yuan ($70 billion) of liquidity into the economy, enabling banks to extend more loans to businesses hit by Covid disruptions.

However, despite the central bank ramping up its stimulus, analysts’ forecasts remain subdued. The economy is expected to expand 3.3 per cent this year, which would be the slowest pace since the 1970s, excluding 2020’s pandemic slump, according to the latest Bloomberg survey.

China's Covid case numbers have hit record highs in recent days, with nearly 40,000 new infections reported on Saturday.