World stocks lower as China scales back many COVID curbs

World shares slipped on Wednesday, with Hong Kongs benchmark down more than 3 per cent, even as Beijing announced it was scaling back its zero-COVID policies.US futures and oil prices also dropped.The declines followed a retreat on Wall Street, driven by fears the Federal Reserve will need to keep the brakes on the US economy to get inflation under control, risking a sharp recession.Germanys DAX fell 0.5 per cent to 14,265.80 and the CAC 40 in Paris declined 0.6 per cent to 6650.32.

World shares slipped on Wednesday, with Hong Kong's benchmark down more than 3 per cent, even as Beijing announced it was scaling back its "zero-COVID" policies.

US futures and oil prices also dropped.

The declines followed a retreat on Wall Street, driven by fears the Federal Reserve will need to keep the brakes on the US economy to get inflation under control, risking a sharp recession.

Germany's DAX fell 0.5 per cent to 14,265.80 and the CAC 40 in Paris declined 0.6 per cent to 6650.32. Britain's FTSE 100 lost 0.2 per cent to 7,504.52. The future for the S&P 500 slipped 0.3 per cent and that for the Dow industrials was 0.2 per cent lower.

In Asian trading, the Hang Seng index in Hong Kong fell 3.2 per cent to 18,814.82. The Shanghai Composite index was down 0.4 per cent at 3,199.62.

The announcement by China's National Health Commission rolled back rules on isolating people with COVID-19 and dropped virus test requirements for some public places.

Experts say it might be at least mid-2023 before controls that disrupt travel, trade and industry can be lifted completely, but world markets have gyrated on speculation that major changes might be coming, helping return the world's second-largest economy to a post-pandemic "normal.'' Tokyo's Nikkei 225 index slipped 0.7 per cent to 27,686.40 and the Kospi in Seoul gave up 0.4 per cent to 2,382.81. The Shanghai Composite lost 0.4 per cent to 3,199.62, while Australia's S&P/ASX 200 dropped 0.9 per cent to 7,229.40.

Shares also fell in Mumbai and Bangkok.

China reported its imports and exports fell in November as global demand weakened and anti-virus controls weighed on the second-largest economy.

Customs data showed exports sank 9 per cent from a year earlier, worsening from October's 0.9 per cent decline. Imports fell 10.9 per cent, down from the previous month's 0.7 per cent retreat. Chinese trade had been forecast to weaken as global demand cooled following interest rate hikes by the Federal Reserve and central banks in Europe and Asia to rein in surging inflation.

On Tuesday, the S&P 500 fell 1.4 per cent, its fourth straight loss, and the Dow Jones Industrial Average lost 1 per cent. The Russell 2000 slipped 1.5 per cent.

Small company stocks also fell, pulling the Russell 2000 index 1.5 per cent lower. The major indexes are on pace for a weekly loss after posting two straight weekly gains.

Stocks pulled back Monday as stronger-than-expected readings on the economy raised worries that the Fed has a way to go in getting inflation under control. The Fed is doing that by intentionally slowing the economy with higher interest rates.

Investors are closely watching economic data and company announcements to get a better sense of how the economy is handling stubbornly hot inflation. They are also trying to determine whether inflation is easing at a pace that will allow the Fed to ease up on interest rate increases. The Fed's policy risks hitting the brakes on the economy too hard and sending it into a recession.

The Fed is meeting next week and is expected to raise interest rates by a half-percentage point. It has raised its benchmark rate six times since March, driving it to a range of 3.75 per cent to 4 per cent, the highest in 15 years. Wall Street expects the benchmark rate to reach a peak range of 5 per cent to 5.25 per cent by the middle of 2023.

Wall Street will get a weekly update on unemployment claims on Thursday. The job market has been one of the stronger pockets in the economy.

On Friday, the government will release its November report on producer prices. That will give investors more insight into how inflation is impacting businesses.

The University of Michigan will release its December survey on consumer sentiment on Friday.

In other trading Wednesday, US benchmark crude oil gave up 70 cents to USD 73.54 per barrel in electronic trading on the New York Mercantile Exchange.

Brent crude oil, the international standard for pricing, dropped 66 cents to USD 78.70 per barrel.

The dollar rose to 137.44 Japanese yen from 136.94 yen. The euro rose to USD 1.0501 from USD 1.0468.