Asian Shares Retreat Amid China’s Covid Surge

Asian stocks fell on Tuesday as investors assessed the impacts of the latest Covid-19 resurgence in China as well as a looming conflict between Beijing and Washington over the former’s support for Russia’s invasion of Ukraine.

Anxiety over the war in Ukraine and the outlook for higher interest rates also kept investors on edge ahead of this week’s Federal Reserve meeting.

China’s Shanghai Composite Index plunged 5 percent to finish at 3,063.96 on concerns about surging Covid-19 cases and the country’s ties with Russia.

Investors ignored data showing that Chinese retail sales and industrial production grew more than expected in the January to February period.

According to the National Bureau of Statistics, retail sales advanced 6.7 percent on a yearly basis, bigger than economists’ forecast of 3.0 percent. Nonetheless, the pace of growth slowed from the 12.5 percent expansion seen in December.

Industrial output logged annual growth of 7.5 percent, which was also better than the 3.9 percent rise expected by economists. Fixed asset investment advanced 12.2 percent from the last year versus the expected growth of 5.0 percent.

Hong Kong’s Hang Seng Index plummeted 5.7 percent to 18,415.08 after the neighboring city of Shenzhen was ordered into a shutdown to combat China’s worst Covid-19 outbreak in two years.

Japanese shares fluctuated before ending slightly higher on the strong Chinese economic data. The Nikkei 225 Index edged up 38.63 points, or 0.2 percent, to 25,346.48, while the broader Topix ended 0.8 percent higher at 1,826.63.

Automakers topped the gainers list, with Toyota, Nissan and Subaru climbing 2-5 percent. Startup investor SoftBank Group slumped 4.2 percent and Uniqlo store operator Fast Retailing declined 4.5 percent.

Australian markets fell notably amid the continuing war in Ukraine and Covid-19-related lockdowns in China. The benchmark S&P/ASX 200 Index dropped 52 points, or 0.7 percent, to 7,097.40, while the broader All Ordinaries Index ended down 66.10 points, or 0.9 percent, at 7,356.10. The Aussie dollar slipped after dovish RBA minutes.

Tech stocks suffered heavy losses, with Block Inc. falling 5.2 percent. Mining heavyweights BHP and Rio Tinto lost around 4 percent each as iron ore prices fell after a surge in Covid-19 cases in China. Energy and gold stocks also declined, tracking weak commodity prices after diplomatic efforts to resolve the Russia-Ukraine conflict calmed supply-disruption fears.

Seoul stocks ended lower for a third straight session as yields rose ahead of Wednesday’s Fed meeting. The Kospi slid 24.12 points, or 0.9 percent, to close at 2,621.53.

Samsung Electronics, SK Hynix and LG Chem gave up 1-4 percent, while financial heavyweight KB Financial Group added 1.6 percent and Kakao Bank surged 5.4 percent.

New Zealand shares ended flat with a negative bias, with travel-related stocks rising after Prime Minister Jacinda Ardern said she would be soon make an announcement bringing forward the re-opening of the borders.

Auckland International Airport rose 1.3 percent and Tourism Holdings jumped 5.8 percent. Tithing app company Pushpay Holdings soared 7.8 percent after confirming its annual earnings guidance.

U.S. stocks ended mostly lower overnight as Treasury yields spiked ahead of an expected interest rate hike.

The tech-heavy Nasdaq Composite plunged 2 percent to hit its lowest closing level in over a year and the S&P 500 shed 0.7 percent, while the Dow ended flat after climbing as much as 450 points in early trading.

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