Sydney, March 15 (BNA): Asian stocks fell as the COVID-19 cases in China weighed on the confidence of investors already wary of the first hike in US interest rates in three years, which could come this week.
MSCI’s broadest index of Asia Pacific shares outside Japan fell 1.91%, led by Chinese stocks. The index is down 8.2% so far this month.
Hopes that talks between Russia and Ukraine due to resume will provide a solution to the conflict have led to a sharp drop in global oil prices.
However, the fourth round of negotiations began on Monday without much progress, adding to the tension in stock markets, according to Reuters.
During the Asian session, US crude oil is down 2.54% to $100.44 a barrel, in line with the broader asset sell-off. Brent crude fell 2.27 percent to $104.42 a barrel.
In US trading, oil prices fell 5.8% as prospects of a positive outcome in Ukraine talks eased concerns about major supply disruptions.
But adding to the overall negative sentiment is a rise in the number of COVID-19 cases in China, which investors fear will hurt mainland economic growth in the first quarter.
“Right now, everyone is looking at the Chinese cases and realizing that this has to have an impact on production,” said Hong Hao, head of research at BOCOM International.
“China’s growth in the first quarter could be closer to zero than 5.5%. There’s a ripple effect. There’s Ukraine, the risk of US sanctions on China and the growing Chinese domestic COVID cases – it just doesn’t look good.”
Hong Kong’s Hang Seng Index remains mired in negative territory, falling 3.8% early Tuesday, after selling close to 5% the day before. Hong Kong’s main board is down 17% so far in March.
China’s CSI300 Index fell 2.3%.
China on Tuesday reported 3,602 confirmed cases of the novel coronavirus, compared to 1,437 cases on Monday, according to the National Health Commission.
Investors are also focused on the US Federal Reserve, which meets on Wednesday and is expected to raise interest rates for the first time in three years to offset rising inflation.
Australian shares fell 0.5% while the Nikkei in Tokyo rose slightly, up 0.17%.
US stocks had a mixed session, as a decline in technology companies pushed most indices to close lower on Monday.
The Dow Jones Industrial Average was mostly flat, the S&P 500 lost 0.74% and the Nasdaq Composite fell 2.04%.
The yield on the benchmark 10-year Treasury rose to 2.1419% compared to its US close of 2.14% on Monday.
The two-year yield, which had risen as traders expected a hike in the federal funds rate, rose to 1.865%, up from 1.849%.
Gold was also weaker in Asia with the spot price at $149.21 an ounce.
HF