Asian Stocks Slump amid Ukraine Crisis and China’s COVID-19 Surge

Asian stocks plummeted on Tuesday amid China’s worst outbreak of COVID-19 since the early days of the pandemic as investors weigh the repercussions of the Ukraine-Russia crisis and the Fed’s upcoming interest rate hike — the first in three years.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped by 1.91%, with Chinese stocks making up the majority of the drop. Hong Kong’s Hang Seng Index continues to be bearish after edging lower by 3.8% during early trade on Tuesday. Additionally, China’s CSI300 index also plunged by 2.3%.

China is currently mired in its biggest COVID-19 flare-up led by surging Omicron infections in the country since the onset of the pandemic in March 2020. As per Reuters, the National Health Commission recorded 3,602 new cases on Tuesday. In order to control the spread of cases, the government has imposed a series of lockdowns in the affected parts of the country.

BOCOM International's Head of Research, Hong Hao said, "Right now everyone is looking at the Chinese cases and realizing that has to have an effect on production." He contended, "China's growth in the first quarter could be closer to zero than 5.5%. There's a ripple effect. There's Ukraine, the risk of U.S. sanctions on China and rising Chinese domestic COVID cases — it does not look good."