China covid crisis jolts markets: Death toll rises, mass testing, metal barriers erected

China is once again sending shockwaves across equities and commodities as covid numbers continue to rise and demand from the world's second largest economy starts to slump.

Shanghai city of 26 million, reported record daily Covid-19 deaths over weekend and reportedly authorities are now constructing metal barriers as authorities race to achieve “dynamic Covid Zero” policy. Beijing, a city of more than 20 million people, has locked down dozens of residential compounds and mass testing three times a week are being imposed.

Strict lockdowns began on March 28 and the hit on economy is starting to show. Fuel consumption in China reportedly dropped 20% in April, which could prove to be one of the biggest oil demand shocks the world has seen since the start of the pandemic. Basically China's fuel usage is down by a whopping 1.2 million barrels a day.

But it is not just oil, but even metals that are melting. The most-traded iron ore futures slumped over 8 percent. Traders nerves are being tested and Bloomberg reports that noted hedge funds are cutting exposure to China stocks rapidly as they see a meltdown worse that 2008.