Shares of Chinese technology giants including Alibaba have been hammered this year, as Beijing has flexed its regulatory muscles on issues including data privacy. But the implications for China’s shifting policies reach beyond its borders.
Curbs on steel production over environmental concerns have driven down prices for iron ore, which has fallen more than 40 percent over the last three months. And global prices for crude oil — China is the world’s largest importer of petroleum — dropped 1.9 percent on Monday.
The price of copper, used in wiring and a hot commodity for Chinese property developers, fell more than 3 percent, weighing on producers worldwide. On U.S. exchanges, industrial stocks that are closely linked to China also fell. Freeport-McMoRan, a copper and gold mining giant based in Phoenix, was one of the worst-performing stocks in the SP 500, falling 5.7 percent.
The elevator maker Otis, a major supplier for Chinese high-rises, dropped more than 2 percent. And the construction equipment maker Caterpillar, whose second biggest market is China, was down 4.5 percent.
Looming decisions by policymakers at the Federal Reserve and in Congress are also weighing on stock market sentiment, analysts say.
On Wednesday, the Fed is expected to signal that it plans to begin reducing its purchases of government bonds, which have pumped trillions of dollars into financial markets since the Covid crisis started in March 2020.
Substantial deficit spending by the federal government has helped supercharge growth and prop up corporate profits during the pandemic. But with much of that money spent, investors are now closely watching the $3.5 trillion spending plan Democrats are trying to push through Congress.