Global stocks fall amid fears of new Covid lockdowns in China

Global stock markets fell sharply on Monday as fears of new lockdowns in China added to concerns over the health of the world economy.

The CSI 300 index fell by 4.9% to hit its lowest level since late May 2020, as authorities ordered that residents in Chaoyang, home to 3.45 million people, should be tested three times this week. Raw materials producers, technology companies and industrial groups were among the major fallers.

Fears that restrictions will be imposed in Beijing also prompted panic buying at supermarkets, as residents braced for curbs similar to those implemented in Shanghai, where a lockdown has entered its fourth week.

In London, the FTSE 100 index dropped by 141 points, or 1.9%, to 7380.5 points, its lowest close in more than five weeks. Mining stocks and energy firms led the fallers, as new curbs in China could hit demand for metals, coal and oil. Anglo American lost 6.85%, BP fell 6.2% and Glencore dropped 5.6%.

The yield, or interest rate, on UK, US and eurozone government bonds fell, a sign that investors were seeking a safe-haven asset and anticipating slower growth.

Benchmark China iron ore futures dropped almost 11% to the lowest in more than a month, on concerns that demand from the steel industry could weaken. Palladium, used in car catalytic converters, slumped more than 10%.

Oil prices tumbled more than 6%, with Brent crude dropping below $100 ($78.60) a barrel for the first time in almost two weeks.

Fears that the US central bank will aggressively raise interest rates this year also hit markets, after signals from several Federal Reserve officials that they will tighten policy to pull down inflation.

The pound dropped 1% to an 18-month low against the US dollar, dipping more than a cent to $1.271.