A fresh bout of Covid in Shanghai has affected Asian markets and oil prices, fanning fears of another economically painful lockdown in China’s biggest city.
This was disclosed after a forecast-busting US jobs report last week indicated the world’s top economy was coping so far with the Federal Reserve interest rate hikes, giving it room for more as it battles soaring inflation.
Traders are also watching closely, the developments in Washington as President Joe Biden weighs removing some of the Donald Trump-era tariffs on Chinese goods worth hundreds of billions of dollars.
At the weekend, Shanghai recorded more than 120 virus cases has seen its first case of the highly contagious BA.5 Omicron strain, forcing officials to launch another mass testing drive.
With China fixated on its zero-Covid strategy of wiping out the disease, there is increasing concern that authorities will revert to another painful lockdown, with Shanghai residents having only emerged from two-month confinement in June.
There have also been new infections uncovered in other parts of the country, including Beijing.
Data this week will provide a fresh update on the economic impact of those measures, as well as similar strict controls in Beijing.
The prospect of another lockdown sparked a sell-off in Hong Kong and Shanghai, while there were also losses in Sydney, Seoul, Taipei, Manila, Jakarta, and Wellington.
