China’s snap lockdown of 26m residents in Shanghai has dented Asian shares and cooled the rise in Brent crude oil prices.
(Picture: AFP via Getty Images)A snap lockdown of 26 million residents in Shanghai took the heat out of a seemingly inexorable rise in oil prices today, sending Brent crude down more than 3%.
The two-stage lockdown in the Chinese city involves the closing of bridges and tunnels, and the restriction of traffic to contain COVID-19 cases in a region regarded as central to the global economy.
Susannah Streeter at Hargreaves Lansdown said: “China’s zero tolerance Covid strategy is causing fresh nervousness about supply chain issues and a slowdown for some sectors.”
Futures contracts priced Brent crude down 3.3% at $116.60 a barrel, reflecting analysts’ fears of longer-term disruption.
Asian stocks had slumped overnight, driven down by a reigniting of Covid-19 concerns and inflammatory comments made by President Biden on regime change in Moscow.
The FTSE 100 largely shrugged off the concerns with mining stocks rising, but energy heavyweights BP and Shell has a muted session.
BP was down 0.4% at 390p while Shell was up 0.5% at 2,111p.
The FTSE was up slightly, 31.95 points higher at 7,515.30.
Geopolitical tensions are unlikely to ease, although FTSE traders were taking some positivity from peace negotiations between Ukraine and Russia that are set to re-start in Turkey. Still, it’s investors are largely taking a wait-and see approach right now.
While oil falters, bitcoin shrugged off an uninspiring start to 2022 to hit a three-month high today.
The world’s largest cryptocurrency rose more than 5% to top $47,000 this morning.
Katharine Wooller, a cryptocurrency analyst, said the token was attracting investors seeking an alternative asset to hedge against both the pandemic and geo-political uncertainty.
Tammy Da Costa at DailyFX said: “Given that inflation remains a key concern for both consumers and policymakers, low-interest rates have supported stocks and Bitcoin despite rising geopolitical risks.”
