BANGKOK -- Hong Kong’s share index plunged 5.4% on Monday after the neighboring Chinese city of Shenzhen was ordered into a shutdown to combat China’s worst COVID-19 outbreak in two years.
Stocks were mixed elsewhere in Asia. European shares and U.S. futures were higher, and oil prices fell.
Against the backdrop of uncertainty from the war in Ukraine, Chinese shares have come under selling pressure from the threat of de-listings of major Chinese companies on U.S. stock exchanges.
A vital manufacturing and technology hub of 17.5 million people, Shenzhen is home to some of China’s most prominent companies, including telecom equipment maker Huawei Technologies Ltd., electric car brand BYD Auto, Ping An Insurance Co. and Tencent Holding, operator of the popular WeChat message service.
The spreading outbreaks of coronavirus in China also are adding to worries over supply chain disruptions.
Hong Kong’s benchmark Hang Seng index regained some lost ground to fall 5% to 19,531.66. The exchange's tech index dropped 11%.
The Shanghai Composite index slipped 2.6% to 3,223.53. The A-share index in Shenzhen's smaller market lost 2.9%.
Authorities restricted access to Shenzhen by suspending bus service and said everyone in the city will undergo three rounds of testing after 60 new cases were reported Sunday. All businesses except those that supply food, fuel and other necessities were ordered to close or work from home.
Infection numbers in mainland China are low compared with other countries and with Hong Kong, which reported more than 32,000 new cases Sunday. But Beijing's “zero tolerance” strategy has led to lockdowns of entire cities to find and isolate every infected person.
In other Asian markets, Tokyo’s Nikkei 225 index rose 0.6% to 25,307.85 and the S&P/ASX 200 in Australia gained 1.2% to 7,149.40. South Korea’s Kospi lost 0.6% to 2,645.65.
The Ukraine crisis and central bank efforts to fight inflation remain the focus for most investors.
The Federal Reserve is due to hold a policy meeting this week, and “Markets are bracing for two diametrically opposed forces," Mizuho Bank said in a commentary. “One is geo-political uncertainty that may leash fresh convulsions of ‘risk off' and the other, a hawkish Fed that is poised to hike" interest rates by at least 0.25 percentage points.
Ukrainian President Volodymyr Zelenskyy vowed to keep negotiating with Russia after talks aimed at reaching a cease-fire failed again on Saturday.
Russia's widening of its offensive to the western part of Ukraine comes amid warnings over the widening impact from the conflict. Moody's Investor Service said it was reviewing its credit ratings for both countries in view of rising security, economic and financial risks.
On Friday, the S&P 500 fell 1.3% to 4,204.31. The Dow Jones Industrial Average lost 0.7% to 32,944.19, while the Nasdaq composite index gave up 2.2% to 12,843.81. The Russell 2000 index of smaller companies slipped 1.6% to 1,979.67.
World markets have been rocked by dramatic reversals as investors struggle to guess how Russia's invasion of Ukraine will affect prices of oil, wheat and other commodities produced in the region.
That's raising the risk the U.S. economy may struggle under a toxic combination of persistently high inflation and stagnating growth. The Federal Reserve is expected to raise interest rates at its meeting this week as it and other central banks act to stamp out the highest inflation in generations, while trying to avoid causing a recession by raising rates too high or too quickly.
Amid all the uncertainty, U.S. stocks remain about 10% below their peak from earlier this year, while crude oil prices remain more than 40% higher for 2022 so far.
U.S. benchmark crude oil lost $3.07 to $106.26 per barrel in electronic trading on the New York Mercantile Exchange. It surged $3.31 per barrel on Friday to $109.33 per barrel.
Brent crude oil, the standard for international pricing, declined $2.45 to $110.22 per barrel.
The U.S. dollar rose to 117.80 Japanese yen from 117.35 yen. The euro strengthened to $1.0945 from $1.0926.