Emerging market stocks hit their lowest in more than two weeks on Monday as a COVID warning from China worried investors already concerned about rising global inflation.
MSCI's index for emerging market equities had fallen 3.1% by 08:43 GMT (10:43am), with Asian stocks leading declines.
Beijing is suffering an "explosive" Covid-19 outbreak connected to a bar, a government spokesman said on Saturday.
Shanghai, meanwhile, has conducted mass testing to contain a jump in cases tied to a hair salon.
Hong Kong stocks dropped 3.2%, while China shares shed 1.2%. Asian markets also reacted to red-hot consumer price data from the United States, which fuelled concerns of an increasingly aggressive stance by the Federal Reserve.
The figures also dashed hopes of inflation having peaked in the United States.
The Fed is now expected to lift its lending rate by at least half a percentage point at the end of its two-day meeting on Wednesday.
"Markets have set off on another rocky ride over inflation fears, following a stronger jump in (the) U.S. consumer price index that was greater than even analysts' higher estimates," said Steve Clayton, fund manager at Hargreaves Lansdown.
"Investors are now fretting that the economic data will force the U.S. Federal Reserve's hand into pushing interest rates up, further and faster than previously forecast."
rand down 1.2%
Currencies in the developing world also took a hit against a strengthening dollar, with South Africa's rand down 1.2%. The currency touched its lowest in nearly four weeks.
India's rupee hit a record low of 78.28 per dollar, while bond yields spiked to their highest levels in more than three years.
Turkey's lira fell to 17.27 per dollar at one point in the day. Data showed Turkish industrial production had grown 10.8% year-on-year in April, faster than a Reuters poll forecast of 8% and rising for a 22nd consecutive month. Production is holding firm against a background of lira weakness and rampant inflation.
Reuters