Oil prices plunged Tuesday as a major crude consumer and global economic engine China placed nearly 30 million people under Covid lockdown.
Hong Kong, Chinese mainland and European markets slumped, but Wall Street opened higher, with investors tracking the resurgence of the coronavirus in China, the war in Ukraine and a key US Federal Reserve policy meeting.
Crude futures slumped under $100 per barrel just a week after benchmark contract Brent North Sea soared to a 14-year high close to $140 following Russia's invasion of Ukraine.
"We have good news and we have bad news," said Briefing.com analyst Patrick O'Hare.
"The good news is that oil prices are down sharply... The bad news is that the big drop in oil prices is due to growth concerns which, by extension, don't bode well for earnings growth prospects," O'Hare said.
While the drop in oil prices could ease inflation concerns, analysts warned that the lockdowns in China could worsen a global supply-chain crisis that has played a major role in driving up prices.
The stock market "negativity has spread beyond China's borders with chipmakers in Europe taking a hit," said Victoria Scholar, head of investment at Interactive Investor.
The virus situation in the world's second-biggest economy has brought more volatility to markets that have swung between fears over the war in Ukraine and hope that Moscow and Kyiv could strike a peace deal.
"This double whammy of the ongoing conflict in Ukraine, with the fresh chaos caused by Covid in China, is rattling nerves," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
Harming Putin's war machine
Global stock markets have been in a spiral since Russian troops marched into Ukraine, leading international powers to impose crippling sanctions on the country and numerous companies to pull out.
The UK government on Tuesday imposed an additional 35-per cent import tariff on a swathe of Russian goods, including vodka, and banned exports of luxury products.
"We want to cause maximum harm to (Russian President Vladimir) Putin's war machine while minimising the impact on UK businesses," the Department for International Trade said.
A series of powerful explosions Tuesday rocked the residential districts of Kyiv, killing two people, just hours before talks between Ukraine and Russia were set to resume.
Among the hardest-hit stock markets in recent days has been Hong Kong, which was already under pressure from China's regulatory crackdown on technology firms as part of the government's move to tighten its grip on the economy.
News that US authorities were also looking to crack the whip over Chinese firms listed in New York added to the selling pressure.
Investors are also keeping a close eye on the Fed's two-day meeting which ends Wednesday, with policymakers expected to hike interest rates to bring decades-high inflation under control.
Key figures around 1345 GMT
West Texas Intermediate: DOWN 6.9 percent at $95.92 per barrel
Brent North Sea crude: DOWN 6.6 percent at $99.87
New York - DOW: UP at 33,083.26 points
London - FTSE 100: DOWN 0.7 percent at 7,143.69
Frankfurt - DAX: DOWN 1.1 percent at 13,777.71
Paris - CAC 40: DOWN 1.0 percent at 6,309.19
EURO STOXX 50: DOWN 0.9 percent at 3,705.84