By Ambar Warrick
Investing.com-- Chinese and Hong Kong stocks sank on Monday amid growing concerns over new COVID-19 lockdowns, while Asian markets fell after strong U.S. jobs data raised the prospect of more steep interest rate hikes by the Federal Reserve.
Hong Kong’s tech-heavy Hang Seng index was the worst performer in the region, dropping 1.4%. Tech majors including Baidu Inc (HK:9888), Alibaba Group Holding Ltd (HK:9988), and Tencent Holdings Ltd (HK:0700) fell between 1.9% and 3%, weighing the most on the index.
China’s Shanghai Shenzhen CSI 300 blue-chip index slipped 0.6%, while the Shanghai Composite index traded flat. Sentiment towards Hong Kong and China worsened over the weekend after the government introduced new curbs in Chinese cities Shenzhen and Chengdu to combat a resurgence in COVID-19 cases.
The lockdowns are the latest in a string of curbs introduced by Beijing this year, as part of its zero-COVID policy. The government’s refusal to budge on the policy has taken a costly toll on China’s economy this year.
Chinese stocks have fallen sharply this year, while the yuan sank to two-year lows.
Still, data on Monday showed that China’s services sector grew more than expected in August, indicating some signs of recovery from the pandemic.
Broader Asian stock markets retreated after data on Friday showed that U.S. nonfarm payrolls grew more than expected in August. The reading gives the Fed more space to keep raising interest rates at a fast pace in 2022.
Traders are now pricing in a 57% chance of a 75 basis point hike by the Fed in September.
Philippine’s PSEi Composite sank 0.6% and was the worst performer in Southeast Asia.
South Korea’s KOSPI index fell 0.3%. Economic activity in the country is expected to face disruptions from Typhoon Hinnamnor, one of the worst storms faced by South Korea in recent times.
On the other hand, Australia's S&P/ASX 200 rose 0.2% after data showed that the country's services sector unexpectedly grew in August. Australian corporate earnings also grew more than expected in the second quarter.