Wall Street uncertain in the last session of the week. The Dow Jones rose 0.11% to 34,803 points; the S&P 500 is flat around 4,448, the Nasdaq lags 0.47% to 14,980.
The week that is drawing to a close saw as protagonists the fears for the default risk of the Chinese real estate giant Evergrande, and therefore for possible domino effects on the markets around the world, and the statements arrived by the Fed and its number one Jerome Powell on the direction future of monetary policy made in the USA.
No announcements on tapering, which at this point most analysts expect for the November Fed meeting.
However, hawkish indications emerged from the dot plot: the exponents of the FOMC – the monetary policy arm of the Fed – predict that the rates on fed funds will be raised up to seven times by the end of 2024.
Hawks have also increased and they estimate a tightening as early as next year.
The prospect of a withdrawal of the various monetary bazookas launched in times of emergency Covid-19 (therefore in 2020) by central banks, also thanks to the rise in inflation, has triggered a sale on government bonds in recent hours with the result that In recent hours, 10-year Treasury rates broke the 1.4% threshold for the first time since mid-July.
The various announcements coming from China continue to besiege Wall Street as well: while the fear of the contagion effect that a possible default of Evergrande could have on the markets seems to fade, Beijing’s cold shower arrives, certainly not the first, on cryptocurrencies.
The central bank of China People’s Bank of China has said that all cryptocurrency-related activities are illegal and that global crypto platforms offering services to mainland China are also illegal.
Immediate drops in Bitcoin and Ethereum. Bitcoin sheds more than 4% to around $ 41,800, while Ether is -9% to around $ 2,800. Crypto stocks in general traded on Wall Street, such as Coinbase, Robinhood and Square, are also bad.
The central bank had already imposed a ban on providing services related to cryptocurrencies to the Chinese e-commerce giant Alibaba and its subsidiary Ant Group.
Sales on Nike: the stock sinks by 6.5%, after the giant of sporting goods has announced that it has reported a turnover that has disappointed analysts’ estimates, due to the slowdown in demand in North America.
The group also revised its outlook for fiscal year 2022 downward, citing problems in the supply chain.
Regarding its fiscal first quarter results, Nike reported that it reported earnings per share of $ 1.16, better than the expected $ 1.11, and revenue of $ 12.25 billion, less than the expected $ 12.46 billion.
Meanwhile, focus on the words of Loretta Meister, president of the Cleveland Fed who, endorsing fears of an imminent tapering, said that the asset purchases that the Federal Reserve makes with Quantitative easing are no longer producing the effect they had in the past .
“QE is no longer as effective as it used to be.” As a result, in his opinion, tapering, or reducing asset purchases, can be started in November. Furthermore, “if inflation is not in line with the Fed’s targets, we will act.”
Mester also added that the Fed does not want “inflation expectations to exceed the 2% level over time”.
In any case, in his opinion, the acceleration of inflation is mainly due to the recovery of demand and the reopening of the post-Covid economy.