Asian stocks extended losses as the Ukraine war took its toll, and the coronavirus rush in China weighed on sentiment

A man wearing a protective mask, amid the outbreak of the coronavirus disease (COVID-19), walks through an electronic board displaying charts (top) for the Nikkei index outside a brokerage in Tokyo, Japan, March 10, 2022. REUTERS/Kim Kyung-Hoon

SYDNEY (Reuters) – Asian stocks fell on Tuesday as a spike in COVID-19 cases in China dented the confidence of investors already wary about the Ukraine war and the first U.S. interest rate hike in three years could come. this week.

MSCI’s broadest index of Asia Pacific shares outside Japan (MIAPJ0000PUS.) It fell 1.97% led by the apparent weakness in Chinese stocks. The index is down 8.2% so far this month.

Global oil prices fell overnight as prospects of a resolution between Russia and Ukraine eased immediate concerns about disruption to energy supplies. Read more

These losses extended into the Asian session, however, as investor focus shifted to the demand side, as the new wave of COVID-19 infections in China overshadowed the outlook for the world’s second largest economy.

More broadly, the lack of significant progress seen in Ukraine-Russia talks on Monday added to the jitters in stock markets while concerns are now growing about the possibility of new tensions between China and the United States.

Washington has warned Beijing against providing military or financial aid to Moscow after its invasion of Ukraine, as sanctions against Russian political and business leaders escalate. Read more

“The question we’re asking is whether the markets have hit peak bearishness,” said Jack Siu, chief investment officer of Credit Suisse for Greater China.

“We know there has been a lot of bad news, and there could be worse to come, stock prices have fallen dramatically and there is no clarity on any decisions from US regulators towards Chinese stocks listed there.”

Hong Kong’s Hang Seng Index (.HSI) It remained mired in negative territory on Tuesday, down 4% after selling around 5% the day before. Hong Kong’s main board is down 17% so far in March.

Technology index in the city (.HSTECH) It has been hit, down nearly 30% this month as investors worry about the next regulatory crackdown from US and Chinese authorities on the sector.

Chinese CSI300 Index (.CSI300) It was down 1.78%, pushing its losses for the month to 11.2%. Australian stocks (.AXJO) It closed down 0.73%.

Ignoring weakness in Asia, S&P 500 stock futures rose 0.21% while Tokyo’s Nikkei index rose 0.21%. (.N225) It reversed its losses and rose marginally by 0.22%.

Adding to the general negative sentiment for markets is a rise in the number of COVID-19 cases in China, which investors fear will hurt mainland economic growth in the first quarter. Read more

China on Tuesday reported 3,602 new confirmed cases of the coronavirus, compared to 1,437 on Monday. Read more.

During the Asian session, US crude was down 5.2% to $97.66 a barrel. Brent crude fell 5.16 percent to $101.37 a barrel. Read more

“Right now, everyone is looking at the Chinese cases and realizing that this has to have an impact on production,” said Hong Hao, head of research at BOCOM International.

“China’s growth in the first quarter could be closer to zero than 5.5%. There’s a ripple effect. There’s Ukraine, the risk of US sanctions on China and the growing Chinese domestic COVID cases – it just doesn’t look good.”

Investors are also focused on the US Federal Reserve, which meets on Wednesday and is expected to raise interest rates for the first time in three years to offset rising inflation.

Wall Street had a mixed session, as the decline in technology companies pushed most indices to close lower on Monday. Read more

The yield on the benchmark 10-year Treasury bond rose to 2.1384%.

The two-year yield, which had risen as traders expected a hike in the federal funds rate, rose to 1.865%, up from 1.849%.

Gold was also weaker in Asia with the spot at $1,932.1 an ounce.

Additional reporting by Scott Murdoch in Sydney; Editing by Sam Holmes

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