The Chinese holiday mood is dampened by the country’s ongoing covid outbreak, which is the worst since Wuhan.

While Shanghai city is set to ease the lockdown restrictions amid fewer than 10,000 cases reported for the second straight day on Monday, Beijing tightens curbs, in adherence to the government’s zero-covid policy.

Beijing announced Sunday that it will ban all restaurants dining and shut down Universal Studios, ordering residents to provide proof of a negative covid test to enter public venues. This comes as the nation heads into a five-day holiday season.

Meanwhile, in Shanghai, officials said Sunday that community transmission in the city had been "effectively controlled.”

Mainland China reported 7,822 new COVID-19 cases on May 1, including 865 symptomatic cases and 6,957 asymptomatic infections, the National Health Commission said on Monday.

Shanghai reported 7,872 local cases Sunday, continuing a general downward trend since April 13. Beijing recorded 41 new cases on Sunday compared with 59 cases on Saturday.

Market reaction

Risk sentiment in Monday’s Asian trading remains dour amid China’s covid concerns and deeper contraction in the world’s biggest manufacturing hub.

Also read: China's purchasing managers indices fell deeper into contraction in April

The S&P 500 futures report 0.60% gains, although the same tone is not reflected in the Asian equities.

The regional indices ex-China are in the red, led by steep losses in New Zealand’s stocks. Chinese markets are closed today in observance of Labor Day.