COVID-19 restrictions in China have begun to spread to Beijing
Safe-haven flows are dominating global financial markets on Monday, with Asian stocks witnessing the worst session in two weeks. Global shares tumbled at the start of the week as restrictions in China have begun to spread to Beijing after a few dozen cases were detected in Beijing’s Chaoyang district over the weekend. This, coupled with rising concerns over too aggressive tightening by the Fed triggered widespread risk aversion across the markets. MSCI’s broadest index of Asia-Pacific shares outside Japan slid more than 2% to a six-week low.
Similarly, European stocks opened sharply lower, with almost all sectors in negative territory. The pan-European Stoxx 600 index opened 1.3% lower despite pro-EU centrist Emmanuel Macron re-election as France’s president. In individual stocks, shares of Philips plunged nearly 10% after the Dutch company reported a sharp decline in first-quarter core profit. On Sunday, ECB’s Lagarde pointed to very high inflation in Europe, adding that 50% of that is related to energy prices. However, if the central bank raises rates today, it is not going to bring the price of energy down, she added.
Elsewhere, the safe-haven dollar rallied across the market amid massive risk aversion on Monday. After the initial bullish gap at the open in reaction to Emmanuel Macron’s victory, EURUSD plunged to March 2020 lows just above the 1.0700 figure earlier in the day before bouncing marginally. The selling pressure surrounding the common currency intensified amid the aggressive buying pressure surrounding the greenback.
Meanwhile, bitcoin fell back to mid-March lows, being under pressure along with traditional risky assets. The BTC price extended losses to the $38,100 area and was last seen changing hands just marginally above fresh local lows, staying under pressure during the early European trading hours. In the near term, the coin needs to regain the $40,000 mark in order to refrain from a steeper sell-off. However, it looks like the path of least resistance is to the downside for the time being.