European stocks dentedby China Covid fears

LONDON (AFP): European equities attempted to rebound on Tuesday but were dented by concern over China’s latest Covid-19 outbreaks.

London rose higher but Frankfurt and Paris shed earlier gains after a mixed Asian showing, as worries grew over Beijing’s efforts to contain rising infections.

Trading was lighter than normal on Wall Street owing to the upcoming Thanksgiving break.

World oil prices clawed back ground, having tumbled the previous day on forecasts of a hit to Chinese demand.

The dollar slid against main rivals ahead of minutes from the Federal Reserve’s last policy meeting that saw it carry out another big hike to US interest rates.

Hopes that the central bank will begin to take its foot off the pedal were boosted earlier this month by figures showing US inflation slowed more than expected, suggesting a series of hikes were beginning to bite. “Stocks (in Europe) are attempting to push higher after closing in the red on Monday,” City Index analyst Fiona Cincotta told AFP.

“Fears of renewed mobility restrictions and tighter curbs are unnerving investors.”
Traders are fearful that Chinese authorities will revert to highly restrictive Covid containment measures.

That could herald a new global economic downturn.
“This isn’t just about China,” warned Cincotta.

“Renewed crackdowns in the world’s second-largest economy raise the prospect of a global recession.”

The OECD forecast Tuesday that world economic growth would slow sharply from 3.1 percent this year to 2.2 percent next year on high inflation.

And it warned of “serious headwinds” including rising interest rates, surging energy prices and Russia’s war on Ukraine.

Global stock markets began November with a rally on easing inflation concerns and signs China was edging towards a looser approach to the disease.

However, the optimism has been given a massive jolt since the country announced its first virus deaths in six months.

Case numbers have surged across China, with residents in Beijing worried that a record number of new infections will lead to lockdown measures similar to those seen earlier in the year in Shanghai, which lasted for months.

The flare-ups came just a week after China said it would begin rolling back some of the strict Covid rules that have been in place since the pandemic started in 2020, even as the rest of the world has moved on.