Hang Seng slumps 3% over COVID lockdown worries, oil falls as Russian attacks in Ukraine intensify

BANGKOK (AP) — Stocks were mixed in Asia and oil prices fell Monday as uncertainty over the war in Ukraine and persistently high inflation kept investors guessing about what lies ahead.

Tokyo and Sydney advanced while Hong Kong, Seoul and Shanghai declined. U.S. futures were higher.

Ukrainian President Volodymyr Zelenskyy vowed to keep negotiating with Russia, as Russian forced bombarded a military training base near the Polish border, killing nine and wounding dozens of people. Talks aimed at reaching a cease-fire failed again on Saturday,

Russia’s widening of its offensive to the western part of Ukraine comes amid warnings over the widening impact from the conflict. Moody’s Investor Service said it was reviewing its credit ratings for both countries in view of rising security, economic and financial risks.

Spreading outbreaks of coronavirus in China have added to uncertainties, with authorities ordering a lockdown in the technology and manufacturing hub of Shenzhen, near Hong Kong, that could worsen supply chain disruptions.

Hong Kong’s Hang Seng index
HSI,
-3.93%

lost 3.8% to 19,779.91 and the Shanghai Composite index
SHCOMP,
-1.95%

slipped 1.3% to 3,266.73.

Chinese shares have also come under selling pressure due to the threat of de-listings of major Chinese companies on U.S. stock exchanges. A report in the state-run newspaper Economic Daily said Monday that regulators are negotiating to resolve a dispute over auditing rules.

The Securities and Exchange Commission has moved to require that U.S.-listed foreign stocks disclose their ownership structures and audit reports. That has come on top of technology-related sanctions against some companies.

Wang Sheng, head of the investment banking division at China International Capital Corp, said in an opinion piece that China and the U.S. should be able to strike a deal.

Tokyo’s Nikkei 225 index
NIK,
0.58%

rose 0.8% to 25,382 and the S&P/ASX 200
XJO,
1.21%

gained 1.2% to 7,147.80. South Korea’s KOSPI
180721,
-0.69%

lost 0.6% to 2,645.

On Friday, the S&P 500
SPX,
-1.30%

fell 1.3% to 4,204.31. The Dow Jones Industrial Average
DJIA,
-0.69%

lost 0.7% to 32,944.19, while the Nasdaq Composite index
COMP,
-2.18%

gave up 2.2% to 12,843.81. The Russell 2000 index
RUT,
-1.59%

of smaller companies slipped 1.6% to 1,979.67.

World markets have been rocked by dramatic reversals as investors struggle to guess how Russia’s invasion of Ukraine will affect prices of oil, wheat and other commodities produced in the region.

That’s raising the risk the U.S. economy may struggle under a toxic combination of persistently high inflation and stagnating growth. The Federal Reserve is expected to raise interest rates at its meeting this week as it and other central banks act to stamp out the highest inflation in generations, while trying to avoid causing a recession by raising rates too high or too quickly.

Amid all the uncertainty, U.S. stocks remain about 10% below their peak from earlier this year, while crude oil prices remain more than 40% higher for 2022 so far.

U.S. benchmark crude oil
CL00,
-2.91%

CLJ22,
-2.91%

CL.1,
-2.91%

lost $3.16 to $106.17 per barrel in electronic trading on the New York Mercantile Exchange. It surged $3.31 per barrel on Friday to $109.33 per barrel.

Brent crude oil
BRN00,
-2.69%
,
the standard for international pricing, declined $3.05 to $109.59 per barrel.

The U.S. dollar rose to 117.83 Japanese yen
USDJPY,
0.40%

from 117.35 yen. The euro
EURUSD,
0.04%

weakened to $1.0906 from $1.0926.