Chinese steel and iron ore futures tumbled on Friday after the country’s central bank unexpectedly raised short-term interest rates, spooking financial markets on the first day back after a week-long Lunar New Year holiday.

While the rate increases were modest, they reinforced views that Chinese authorities are intent on both containing capital outflows and reining in risks to the financial system created by years of debt-fuelled stimulus.

Along with other commodities including copper and rubber, Chinese investors also sold off equities.

The most-active rebar on the Shanghai Futures Exchange closed down 6.8 percent at 3,113 yuan ($453) a tonne.

Iron ore on the Dalian Commodity Exchange fell 5.4 percent to end at 611.50 yuan per tonne.

Trading in the physical market was slow with many participants still on “holiday mode”, said a Shanghai-based iron ore trader.

“But I don’t expect to a see a rush of restocking after the holiday. Many mills have built their stocks long before,” he said.

The weaker futures could drag down spot iron ore prices, which did not move while China was on holiday.

Iron ore for delivery to China’s Qingdao port .IO62-CNO=MB was unchanged at $83.34 a tonne from Jan. 26 through Feb. 2, according to Metal Bulletin.

“Slowing Chinese construction activity in 2017 is expected to weaken steel demand, and with it, demand for iron ore and metallurgical coal,” National Australia Bank said in a note.

Source: Reuters (Reporting by Manolo Serapio Jr.; Editing by Tom Hogue)