Oil prices were knocked back from their latest surge and many companies were affected as authorities in China put the mega-city of Shanghai into a two-stage coronavirus lockdown after a local surge in cases.
Shanghai officials said on Sunday they would lock down the city in two stages to carry out widespread Covid testing of the financial and manufacturing hub.
Using the Huangpu river as a dividing line, from Monday the eastern side of the city has been locked down first and is scheduled to last until Friday morning.
Various commodities pulled back as investors weighed up disruption against potentially weaker demand from the rolling lockdowns in the country.
Brent Crude Oil (LSE:BRENT) fell 5% to US$114.71, having been lifted at the end of last week on news of a drone attack on a Saudi storage facility.
Copper prices continued to soften having hit from a $10,845/t high last month, while nickel prices fell 8% on continued very thin trade volumes in London, though iron ore was up 2.8%.
Shanghai is a major metals trading hub for copper but, said analyst John Meyer at SPAngel, "should not see significant disruption to trade from the lockdowns", though some local manufacturers are likely to see some disruption depending on how long the lockdown lasts.
Such companies included Tesla Inc (NASDAQ:TSLA), which had already halted production earlier in the month. According to a report from Reuters, the carmaker has paused the production line for four days.
While iron ore prices were up, this was on positive Chinese industrial data and, with Meyer saying traders are buying the steelmaking ingredient following data that Chinese industrial companies enjoyed strong profit growth in Jan-Feb 2022.
"Analysts expect strong demand for restocking on an easing of the lockdown in Tangshan, China’s steelmaking hub."
On the impact of Shanghai measures on oil, market analyst Ipek Ozkardeskaya at SwissQuote said: "The new shutdown measures due to COVID are expected to be short-term road bumps on a long up-trending road, as the impact of the lockdowns on medium-term oil demand will certainly remain limited, whereas the tight supply concerns – which are amplified by the tensions in Saudi with the Houthi rebels should keep oil prices under a decent positive pressure."
But across Europe, shares were mostly higher, even for China-focused stocks, with the Shanghai Composite index even finishing just above flat.
London-focused investment trusts JPMorgan China Income & Growth rose 3.7% and Fidelity China Special Situations PLC (LSE:FCSS) climbed 2.5%, though Baillie Gifford China Growth fell 0.6%.