China Stocks fall on COVID-19 spread concerns

11 Jan 2022 , 05:28 PM

The Mainland China share market finished session lower on Tuesday, 11 January 2022, as investors grappled with an uptick in COVID-19 infections in the country and worries that the normalization of U.S. monetary policy might be brought forward to fight inflation.

At close of trade, the benchmark Shanghai Composite Index declined 0.73%, or 26.08 points, to 3,567.44. The Shenzhen Composite Index, which tracks stocks on Chinas second exchange, dropped 1.06%, or 26.09 points, to 2,441.23. The blue-chip CSI300 index added 0.96%, or 46.27 points, to 4,797.77.

Expectations of higher U.S. rates continue to rise alongside rising U.S. inflation, with some of Wall Streets biggest banks now flagging four possible hikes this year. In contrast, Chinese policymakers, increasingly focused on stabilising a slowing economy even before recent outbreaks of the novel coronavirus that causes COVID-19, are widely expected to maintain a loosening bias.

China is battling with its latest local COVID-19 outbreaks, and the Omicron variant has been detected in at least three provinces. The northern Chinese city of Tianjin reported 40 new confirmed coronavirus cases on Tuesday morning, as it battles an outbreak of the highly infectious Omicron variant of the virus.

CURRENCY NEWS: Chinas yuan was up against the U.S. dollar on Tuesday, despite weaker mid-point fixing by the central bank, due to robust corporate demand. Prior to market opening, the Peoples Bank of China (PBOC) set the midpoint rate CNY=PBOC at 6.3684 per dollar, down from the previous fix 6.3653. In the spot market, the onshore yuan CNY=CFXS was changing hands at 6.3706 around late afternoon, 62 pips firmer that Mondays late session close.

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