Stocks and commodities fall on Fed, China lockdowns

U.S. stocks fell alongside oil prices and other commodities as investors juggled concerns over the pace of Federal Reserve hikes and more lock downs in China amid rising COVID cases.

On Friday, the Dow lost 1,000 points, or 2.8%, its worst daily percentage drop since October 28, 2020, according to Dow Jones Market data. The S&P 500 index fell 2.8%, while the Nasdaq Composite Index fell 2.6%. All three indexes were at levels last seen in March, and all three of them were left at the same level as last seen in mid-March.

After the end-of-week meltdown, stock futures fell Sunday evening as news of new COVID lockdowns in China added to worries for already jittery investors.

There were millions of residents tested and shutting down business districts and some residential areas on Monday due to a spike in infections. Millions of people in Shanghai are under restrictions because of the rising infections in the financial hub.

More lockdowns reduce demand for commodities in the short-term, but lockdowns also cause bottlenecks in the world s factory which cause more delays and possibly inflation in consumer markets in the U.S. and Europe, according to strategists at Saxo Bank.

China's CSI, slumped 4.9% to 3,814, its weakest close since April 2020, while a host of commodities were also hit hard. Steel and iron ore futures fell in Asia and the U.S. CL 00, and Brent crude prices BRN 00, were down over 5%.

The People's Bank of China said later on Monday it was cutting its foreign exchange deposit reserve ratio by 1 percentage point to 8%. The investors piled into bonds and the dollar, but not gold.

Markets are facing a busy week on the economic front, as the Fed is in a blackout period ahead of the May 3 -- 4 Federal Open Market Committee meeting. The March core personal-consumption expenditures price index, the central bank's preferred inflation indicator, is due Friday. Wall Street is bracing for a busy earnings week, with 175 S&P 500 companies, including 13 Dow 30 components, scheduled to report results for the first quarter, according to FactSet. Saxo strategists believe that technology companies are the biggest contributors to the main indices, so it is important to know how these companies perform on earnings this week, as technology companies can demonstrate less impact from inflation.

European stocks fell Monday, with no lift from news that French President Emmanuel Macron was elected for a second term, defeating far-right challenger Marine Le Pen, as investors focused on broader macroeconomic worries.

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What are the companies that are in focus?

The shares of Twitter Inc. TWTR climbed by 3.5%. According to News reports, the social-media platform could decide as early as Monday to sell itself to Tesla Inc. Chief Executive Elon Musk in response to the $43 billion bid.

Gold GC 00, fell $32.50, or 1.7%, to $1,901. An ounce is 70 an ounce.

The Shanghai Composite SHCOMP fell 5.1%, while the Hang Seng Index HSI fell by 3.7% in Hong Kong and Japan's Nikkei 225 NIK, fell 1.8%.