Industrial Metals and Oil and Gas stocks reeled at the start of the week amid concern about the impact that Covid-19 lockdowns in China might have on supply chains, the global economy and prices.
Investors awoke to news of a new Covid-19 outbreak in Beijing, which immediately stoked fears that it it too might be headed towards a hard lockdown, like Shanghai, where mobility restrictions were entering their fifth week.
Crude oil and copper futures slumped on the news, while the US dollar was bid sharply higher.
By the end of the trading in London, Brent futures were off by just over 6% and flirting with psychological support at $100 a barrel on the ICE.
Copper futures meanwhile were down by 3.56% on COMEX at $443.80 a pound.
June gold on COMEX was also under pressure, giving back 2.1% to $1,895.50/oz, while the US dollar index was ahead by 0.49% to 101.72 and trading near its best level since March 2020.
Benchmark 10-year US Treasury note yields meanwhile were off by 11 basis points to 2.78%, confirming that investors were putting more weight that lockdowns in China might have on economic activity rather than prices.
Worth noting, Liang Wannian, the person in charge of China’s response to the pandemic, said that the country had to pursue a “dynamic zero-Covid” policy or court disaster due to low vaccination rates among the elderly and the shortage of medical resources.
Linked to the news out of China, Burberry was near the bottom of the pile in the Personal Goods space.
Going the other way, defensives benefitted from the latest bout of risk aversion, including a greater than 5% drop overnight for the Shanghai Stock Exchange’s composite index.
Top performing sectors so far today
Personal Care, Drug and Grocery Stores 4,021.77 +2.21%
Beverages 29,866.86 +1.35%
Gas, Water & Multiutilities 6,479.05 +0.86%
Investment Banking and Brokerage Services 13,039.81 +0.69%
Electricity 11,456.61 +0.64%
Bottom performing sectors so far today
Industrial Metals & Mining 7,006.82 -5.31%
Oil, Gas and Coal 7,023.21 -5.16%
Personal Goods 27,612.43 -4.89%
Industrial Transportation 3,458.58 -3.98%
Life Insurance 6,620.72 -3.17%
