December 29, 2022: Asia-Pacific stocks fell in early trade on Thursday as the Covid surge in China cast a shadow over markets across the region.
Investors had cheered the easing of China's strict zero-Covid controls — which had hammered the world's second-largest economy — but are now worried about the impact of the outbreak on global supply chains and inflation.
The United States, Japan and Italy have imposed restrictions on visitors from China, and a senior US official warned that the surge increases the potential for new Covid variants to emerge.
Hong Kong and Tokyo were both down more than one percent in early trade. Sydney, Singapore, Shanghai, Taipei and Seoul were also in the red.
Volumes were thin in the final trading week of the year, with investors chewing on the prospects of a recession in 2023, and how central banks — especially the US Federal Reserve — are going to handle the fight against rampaging inflation.
The Fed and others have repeatedly raised interest rates to put the brakes on soaring prices, but higher borrowing costs also slow down economic activity.
