Mainland Chinese shares tumble amid Covid fears as Beijing expands testing; HSBC profit falls
SINGAPORE — Chinese stocks turned around from early declines on Tuesday after plunging the previous day, despite Covid fears in China as Beijing expands mass testing.
Hong Kong’s Hang Seng index jumped 1.86% after dropping more than 3% the previous day. The Hang Seng Tech index was up more than 5%.
Mainland and Hong Kong stocks had tumbled Monday as worries over a Covid surge and potential lockdowns in Beijing took hold. Beijing also announced late Monday that mass testing will be expanded to another 10 districts and one economic development area, according to Reuters.
“Markets reacted negatively to news that COVID is spreading more rapidly in China, prompting fears of additional lockdowns and reduced output. This directly impacted Asian markets and also rippled through global financial markets,” ANZ Research analysts Brian Martin and Daniel Hynes wrote in a Tuesday note.
Zhang Zhiwei, chief economist at Pinpoint Asset Management, said he sees risks that China’s GDP may shrink in the second quarter.
“Many high frequency indicators such as mobility, truck cargo, power plant coal utilization show negative growth. It is not clear where the bottom of this economic slowdown is without a change of the zero tolerance policy,” he said.
Other Asia markets mixed
Japan’s Nikkei 225 rose 0.65%, while the Topix rose 0.37%. South Korea’s Kospi jumped 0.71%.
Australian stocks however fell as trading resumed from a holiday on Monday. The S&P/ASX 200 plummeted almost 2%.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up about 1%.
In earnings, HSBC is set to report its first-quarter results.
U.S. stocks were in negative territory earlier in the day, but recovered by the close. The Dow Jones Industrial Average cut a nearly 500-point intraday loss Monday, rising 238.06 points, or 0.7%, to 34,049.46. The S&P 500 ticked up 0.6% to 4,296.12. The tech-heavy Nasdaq Composite gained 1.3% at 13,004.85.
Currencies and oil
The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 101.545, extending its rise from levels just above 101.
Oil prices rose on Tuesday morning in Asia trade after tumbling on Monday as Covid fears in China raised demand fears.