If you believe the spread of Covid-19 has ended, think again. In China the number of coronavirus cases has more influence over markets than comments from US Federal Reserve governors.
The effect of China’s zero-Covid policies, once largely confined to local stocks, is spreading again to markets worldwide. Many investors had hoped China was ready to start reopening, but the worst case may be about to materialise.
In its capital, cases have hit a fresh record high. Beijing shut down public spaces such as shopping centres and parks on Tuesday, while many other Chinese cities have restarted mass testing for Covid. A nationwide surge in cases is nearing its daily infection record of the year.
Beijing has warned it faces its most severe test of the pandemic. That is worrying as such warnings have previously preceded strict lockdowns. More than 40 Chinese cities are currently under restrictions. Analysts estimate these would affect nearly one-fifth of total manufacturing output.
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