Stocks wobble as China's Covid surge spooks investors

Stocks sank in Asia and wavered in Europe on Thursday, with sentiment clouded by China's Covid surge.

Covid cases are surging in China, sparking fears about the outbreak's impact on the global economy AFP News

Stocks sank in Asia and wavered in Europe on Thursday, with sentiment clouded by China's Covid surge.

The United States has joined a growing number of countries in imposing restrictions on visitors from China after Beijing announced it would remove curbs on overseas travel as Covid cases surge.

Investors had previously cheered the easing of the nation's strict zero-Covid controls -- which had hammered the world's second-largest economy -- but are now worried about the impact of the outbreak on global supply chains and inflation.

Hong Kong stocks slid 0.8 percent and Tokyo lost 0.9 percent, while Sydney, Singapore, Shanghai, Taipei and Seoul also languished in the red.

Europe lapsed into negative territory at the open, before diverging as the morning progressed.

"The Covid spike (in China) looks to be impacting sentiment in markets, especially with other countries now taking action due to the scale of the surge," Craig Erlam, analyst at trading platform OANDA, told AFP.

"There is a risk ... that the relaxation of curbs will cause some disruption and have knock-on effects elsewhere."

Yet volumes were thin in the final trading week of the year, with investors chewing on the prospects of a recession in 2023, and how central banks -- especially the US Federal Reserve -- are going to handle the fight against rampaging inflation.

"More broadly, equity markets are just drifting into the New Year and will continue to be choppy for the rest of the week in what I expect will be very thin trade," Erlam added.

The Fed and others have repeatedly raised interest rates to put the brakes on soaring prices this year, but higher borrowing costs also slow down economic activity.

Wall Street tanked Wednesday, with the Dow losing 1.1 percent and the tech-rich Nasdaq sliding 1.4 percent, extinguishing hope of a prolonged festive rally.

World oil prices fell sharply on Thursday, with traders concerned that the new China outbreak could fuel a global resurgence of the pandemic and ravage energy demand once again.

In Europe, Germany shrugged off Russia's ban on oil sales to countries and companies that comply with a price cap on its crude exports.

The price ceiling of $60 per barrel agreed by the European Union, G7 and Australia came into force this month in response to the Russian invasion of Ukraine.

It seeks to restrict Russia's revenue while making sure it keeps supplying the global market.

London - FTSE 100: DOWN 0.1 percent at 7,487.64 points

Frankfurt - DAX: UP 0.2 percent at 13,959.01

Paris - CAC 40: UP 0.2 percent at 6,521.28

EURO STOXX 50: UP 0.3 percent at 3,819.65

Tokyo - Nikkei 225: DOWN 0.94 percent at 26,093.67 (close)

Hong Kong - Hang Seng Index: DOWN 0.97 percent at 19,741.14 (close)

Shanghai - Composite: DOWN 0.4 percent at 3,073.70 (close)

New York - Dow: DOWN 1.1 percent at 32,875.71 (close)

Euro/dollar: UP at $1.0639 from $1.0612 at 2215 GMT on Wednesday

Pound/dollar: UP at $1.2037 from $1.2018

Euro/pound: UP at 88.38 pence from 88.31 pence