HONG KONG: Asian equities retreated Monday following last week's temporary rally on Wall Street due to fears of surging inflation and supply chain woes inflicted by Beijing's punishing zero-Covid policy.
World markets have been volatile for much of 2022, fuelled by uncertainty over supply chain snarls due to China's lockdowns, inflation pressures and anxiety over Russia's invasion of Ukraine.
One of the main drivers of volatility is China's continued lockdowns. Economic engine Shanghai in particular has been under strict virus restrictions since April, shuttering factories and pausing port activity.
The extent of the economic haemorrhaging was revealed Monday when China's National Bureau of Statistics announced that retail sales had slumped by 11.1 percent on-year in April and its industrial production sank 2.9 percent -- the lowest showing since March 2020.
"It is clear that the impact of lockdowns, or the fear of lockdowns, overwhelmed any economic easing, and the Shanghai lockdown had ripple effects across the nation," said Wei Yao, head of research for Asia Pacific and chief economist at Societe Generale SA, according to Bloomberg.
The urban unemployment rate also climbed to its highest level in more than two years -- which Wei said will be of particular worry to China's leadership.
"If this set does not raise the urgency of adjusting the zero-Covid measures to allow the economy to normalize, we don't know what will," she said.
"The market continues to trade on very short-term recessionary signals. It is very 'noisy,' keeping intraday volatility high with 150-250-point swings (being) common," said Stephen Innes of SPI Asset Management.
"Indeed, this is the hallmark of a market filled with air pockets which have left more than a few investors licking their wounds."
Markets in Asia were mixed throughout the day, while Frankfurt, Paris and London opened down.
Economist Clifford Bennett of ACY Securities said "there is a very real risk, even likelihood of a triple Northern Hemisphere recession across the US, Europe and China simultaneously and virtually immediately".