Wall Street down, weighed down by anxiety about the fate of China, the world‘s second largest economy, exhausted by the zero tolerance policy towards Covid.
At about 16.00 Italian time, the Dow Jones loses 0.49%, the Nasdaq falls by 0.30%, the S&P 500 falls by 0.58%. The markets generally discount the news coming from China: several demonstrations by Chinese citizens exasperated by the lockdown measures and the restrictions that the Beijing government is continuing to implement to stem the new wave of Covid.
Apple confirms itself among the illustrious victims of the chaos that is affecting China: Bloomberg reports some rumors, according to which Apple and Foxconn – the Taiwanese company that manages the Apple plant in China located in Zhengzhou, China – would have revised upwards the forecasts for the decline in production of Apple’s iPhones: rumors speak of a potential loss of production of 6 million iPhone Pros, due to the riots and unrest that affected the plant, where thousands of employees were placed in solitary confinement for fear of covid. Also known as iPhone City, Foxconn’s Zhengzhou plant produces most of the iPhone 14 and other iPhone Pro Max.
In general in China, several students have organized demonstrations at different universities in the last three days; people have poured onto the streets of Beijing, Shanghai, Wuhan, Lanzhou, and several other cities, according to videos that have been circulating on social media.
The anti-lockdown demonstrations from Covid initially started from Urumqi, in Xinjiang, last Friday, following a fire that on the eve of which claimed 10 lives in an area that has been under lockdown for months.
According to the protests, the checks launched by the local authorities to guarantee the isolation of the residents would have delayed the arrival of the firefighters, causing the death of ten people.
Following the protests, local authorities have begun to loosen controls: the anger of the Chinese is strong, considering that the restrictions of the Zero Covid Policy are continuing to weigh down the growth of the country’s economy, which is now facing a youth unemployment rate which is around 20%. Some videos show protesters calling for the resignation of Chinese President Xi Jinping and the Communist Party itself.
Also suffering are oil prices which, with the sell-offs of the last few hours, have wiped out all the gains for 2022.
Prices of WTI – West Texas Intermediate traded on New York’s Nymex – plunged to $73.60, to the lowest since December 2021, after suffering a plunge of as much as 14.6% since the beginning of November. WTI is set to finish its worst month since November 2021, when it fell 20.8%.
Brent has plunged to an intraday low of $80.61, the lowest since $80.50 on Jan. 10.
Brent is also close to ending the worst month since November 2021, after a monthly loss, again, of 14.6%.
Contracts sank more than 3%, then trimmed losses.
Returning to Wall Street, the Dow Jones rose in last Friday’s session – the day of Black Friday, in which the US stock market closed early at 1pm New York time – up 152.97 points, or 0. 45%, at 34,347.03: for the DJ it was the third consecutive session of increases; the S&P 500 fell 0.03% to 4,026.12, while the Nasdaq Composite was down 0.52% to 11,226.36.
All three indices ended the week in positive territory: the Dow Jones advanced 1.78% and the S&P 500 rose 1.53%. The Nasdaq gained 0.72% on a weekly basis.
This week, while waiting for the days when the Fomc, the monetary policy arm of the Fed, will meet (on December 13th and 14th), to announce its next anti-inflation rate hike, the wait will mainly be for the publication, Friday 2 December, of the November US employment report.
Economists expect job growth of 200,000, decelerating for the second consecutive month.
However, it must be said that, albeit at a slower pace, several economists point out that the growth in employment confirms the solidity of the US labor market, thus making further monetary tightening by Jerome Powell’s Fed necessary.
On November 2, the Fed raised US fed funds rates by 75 basis points for the fourth consecutive time, to a new range of between 3.75% and 4%, a record since 2008.
“A substantial majority of participants believed that a slowdown in the pace of (rate) hikes would soon be appropriate,” reads the Fed minutes, covering that last FOMC meeting, which were released last week. the time required for the effects of monetary policy to manifest themselves on economic activity and inflation and their intensity are among the reasons cited”.