Despite the uncertainty emanating from the Ukraine war on Europe's energy supply, energy prices continued to fall significantly on Tuesday.

Barrel prices fell below $100 for the first time this month.

Brent North Sea oil was last traded at $99.03 and American WTI light oil at $94.62.

Martin Hock

Editor in Business.

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Prices have meanwhile moved significantly away from their multi-year highs of around 145 dollars, which they marked a week ago in the course of the Ukraine war.

Nevertheless, these are still well above the 15-year averages of around $77 for Brent and $71.56 for WTI.

There is still hope that there could be a rapprochement in the talks between Russia and Ukraine.

Follow the "No-Covid-Strategy"

Observers see the Chinese measures against new corona outbreaks as another reason for the weaker oil prices.

The strict course, also known as the "No-Covid strategy", provides for extensive lockdowns even in the case of smaller corona outbreaks.

The number of infections is now showing the sharpest increase since the beginning of the pandemic.

28 out of 31 provinces report symptomatic cases.

More than 45 million people are now in quarantine at home.

International flights are no longer allowed to land in Shanghai, and almost half of the population in Hong Kong is said to be infected.

There are now fears that this could weigh more heavily on the country's already flagging growth - although economic data for January and February surprised on the upside on Tuesday.

Industrial production in February was 7.5 percent above the previous year's value, 4 percent was expected.

Retail sales also slowed much less than expected, up 6.7 percent.

Nevertheless, the values ​​show that the Chinese economy is facing considerable headwinds this year, says Johannes Mayr, chief economist at Eyb & Wallwitz.

The biggest problem for Chinese industry is not material shortages or high raw material prices, but the restrictions of the zero Covid strategy.

In addition, the ongoing correction in the real estate market, which accounts for around 30 percent of the economy as a whole, is also having an impact on consumption.

Tax relief is conceivable

Without further stimulus, the growth target of 5.5 percent for 2022, which is already the lowest in the past 30 years, could be missed.

The Chinese central bank will therefore continue to lower interest rates and increase the credit stimulus.

However, the People's Bank of China refrained from cutting interest rates on Tuesday, disappointing markets.

An interest rate cut is now all the more expected in the coming month.

Prime Minister Li Keqiang announced economic stimulus measures, tax breaks are possible.

A growth rate of 5.5 percent means stability at a high level.

This is synonymous with progress, but not easy to achieve.

Observers are also worried about the recent rise in unemployment.

This reached 5.5 percent in February after 5.1 percent at the beginning of the year.

Youth unemployment also rose to 15.3 percent from 14.3 percent at the end of last year.

The economic situation on Tuesday also contributed to the fact that share prices, which had already fallen sharply on Monday, continued to fall sharply.

The CSI 300 index fell 4.6 percent to 3,984 points, the sharpest one-day drop since July 2020. Hong Kong's Hang Seng index even fell 5.7 percent to 18,415 points, suffering the most Price decline since the stock market crash of 2015.

German industry dependent on the Chinese economy

China's stock markets are in a bear market.

Since February 2021, when the Chinese leadership began its campaign against large private companies, particularly in the technology sector, the CSI-300 has fallen 31 percent and the Hang Seng has fallen 40 percent.

The Hang Seng Tech Index has even lost 68 percent.

The national currency, the yuan, which saw a notable appreciation from 7.18 yuan to the dollar after the acute corona crisis in spring 2020 to 6.31 yuan on February 23, the day immediately before the Russian invasion of Ukraine since then significantly devalued to 6.41 yuan.

This shows, as well as the accelerated price losses on the stock market since the beginning of the month, that there are great fears that the Sino-American antagonism will intensify.

However, some observers also believe that the Chinese National Bank is not unwilling to see a devaluation of the yuan as an economic stimulus and has therefore decided not to raise interest rates.

On the other hand, a widening interest rate differential with the US could accelerate fund outflows.

The developments on the raw materials markets, on the other hand, are currently quite erratic.

They are driven by headlines, Daniel Hynes, strategist at Australia & New Zealand Banking Group, told Bloomberg.

He believes oil prices will come under even more pressure.

But that doesn't reflect the fundamental picture, which includes that Russian oil is increasingly isolated.

The weak development of the Chinese stock market is also having a negative impact on the German stock market.

The market-wide FAZ index fell by 0.5 percent to 2376 points, the Dax lost more than 1 percent to 13,770 points.

In addition, investors are holding back before the US Federal Reserve's upcoming interest rate decision.

Due to its dependence on exports, German industry is dependent on a good Chinese economy.