Australian Economy

ASX to rise, Wall Street falls as spike in COVID-19 cases prompt China lockdowns

Australian shares are expected to rise in morning trade, despite losses on Wall Street and European markets overnight.

ASX futures were up 0.5 per cent, to 7,180 points, by 7:15am AEDT.

The Australian dollar was trading at 66 US cents, following a 1.1 per cent slump. This was largely due to a stronger US greenback as traders fled from riskier currencies.

It also comes as a spike in COVID-19 cases and newly recorded deaths in China prompted authorities in the world’s second-largest economy to reinstate lockdowns, triggering worries over the impact on the global economy.

“It looked like zero COVID was moving in the right direction and everyone was excited, but the Chinese government is taking some strong action and in the short term there’s going to be fits and starts,” said Thomas Hayes, chairman of Great Hill Capital in New York.

Beijing’s most-populous district urged residents to stay at home on Monday as the city’s COVID-19 case numbers rose, while at least one district in Guangzhou was locked down for five days.

“There is this fear that China might reinstitute some of the COVID restrictions that they’ve just purportedly started to lift,” said Carol Schleif, deputy chief investment officer at BMO Family Office.

“That’s a piece of what’s driving the tech stocks down because we rely so much on China and Taiwan for critical components.”

Global markets retreat

On Wall Street, all three major indexes were dragged down by a sell-off in technology, energy and consumer discretionary stocks.

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