By Scott Murdoch

SYDNEY, (Reuters) – Asian stocks fell on Tuesday due to rising COVID-19 case numbers in China. This was a result of investor anxiety about the Ukraine conflict and the possible first U.S. rate hike in 3 years.

The MSCI Asia-Pacific share index outside Japan was down 1.97% due to pronounced weakness of Chinese stocks. This month, the index has fallen 8.2%.

Overnight, oil prices worldwide fell as the prospect of talks between Russia & Ukraine ending with some sort of settlement eased immediate worries about disruptions to energy supply.

These losses continued into the Asian session. However, investors now focus on the demand side of the equation with China’s latest wave COVID-19 infection casting doubt over the future prospects for China’s second largest economy.

In general, the lack of progress in Ukraine/Russia talks Monday has contributed to the anxiety in stock markets. Meanwhile, concerns grow about new tensions between China (and the United States)

Washington has warned Beijing to stop providing financial and military support for Moscow following its invasion Ukraine.

Jack Siu said, “The question that we’re asking is whether or not the markets have attained peak bearishness.” Credit Suisse (SIX) Chief Investment Officer for Greater China

We know that there have been some bad news and we could see more. Stock prices are down significantly, and U.S. regulators remain unclear about any possible resolutions for Chinese stocks listed in the United States.

After a close to 5% drop in the previous day, Hong Kong’s main board remained stuck in negative territory. Tuesday’s decline was 4%. Hong Kong’s mainboard is now down 17% for March.

As investors fear about the imminent crackdown by U.S. or Chinese authorities, the tech index in the city has fallen nearly 30%.

China’s CSI300 index fell 1.78%. This pushed its monthly losses to 11.2%. Australian shares ended down by 0.73%

Stock futures rose 0.2% despite the weakening in Asia. Tokyo’s Index, on the other hand, was slightly higher at 0.22%, reversing its losses.

The rising number of COVID-19 cases, which are affecting China’s economy in China, is adding to market negativity. Investors worry that this will slow down the country’s first quarter economic growth.

China has reported 3602 coronavirus new cases on Tuesday, as compared to the 1,437 that were reported on Monday.

In the Asian session, it fell another 5.2% to $97.66/barrel. The barrel price fell 5.16%, to $101.37.

Hong Hao from BOCOM International, head of research said that “Right now everybody is looking at Chinese cases and realising it has an effect on production.”

China could see a 5% growth rate in its first quarter, rather than 0%. The ripple effect has already begun. The Ukraine is at risk, and there’s a rising number of COVID cases. It doesn’t look good.”

Investors are also focused on the U.S Federal Reserve. It meets Wednesday. They will likely raise interest rates for the third time in three year to counter rising inflation.

Wall Street saw mixed results, as declining tech companies caused most indexes closing lower on Monday.

The benchmark yield rose to 2.1384%.

The yield on a two year basis, which increases with traders’ expectations for higher Fed Fund rates, was 1.865%. This is an increase from 1.849%.

Asia also saw gold prices drop with spot at $1,932.1 an ounce [GOL/]