Wall Street uncertain in the first minutes of today’s session: at around 3.52 pm Italian time, the Dow Jones lost around 59 points (-0.18%); the S&P 500 retraces 0.10%, while the Nasdaq is down 0.08%.
The Dow Jones Industrial Average lost 497.57 points or 1.45% yesterday. The S&P 500 was down 1.54% while the Nasdaq Composite closed down 1.58%.
What put pressure on Wall Street was the fear of strong internal tensions in China, after the news of the demonstrations organized in various cities by citizens frustrated by the rigidity of the zero tolerance policy towards Covid – the Zero Covid Policy – to which the government of Beijing continues to comply.
Politics is putting citizens’ patience to the test, crippling, among other things, the growth of the Chinese economy with the continuous restriction and lockdown measures. China is also the largest importer of crude oil in the world, a factor that depressed oil prices yesterday: both WTI and Brent canceled the gains collected in 2022.
Today it is still China that acts as a market mover.
Hong Kong stocks rallied, with the Hang Seng index closing up 5.24% at 18,204.68 and the hi-tech sub-index Hang Seng Tech index surging 7.66%, after the Chinese authorities have communicated an increase in vaccinations for older citizens in China: the news has been welcomed by the markets, as a higher number than the current number of vaccinations for the elderly is considered a crucial prerequisite to allow the reopening of the economy made in China.
The Chinese stock index CSI also made a comeback today, which closed up 3.09% at 3,848.42, after the new cases of Covid in China fell compared to Sunday: this is the first drop in new infections since last November 19.
The buys on Chinese Big Tech are also evident on Wall Street, for those giants that are also listed in New York, such as Alibaba (+5.7%), JD.com (+8%), Pinduoduo (+5.2% ) and Baidu (+6.6%). Bilibili stock is up about 20% on Wall Street.
However, Wall Street chooses caution. In the background, there are those who call for caution:
“There are reasons to be cautious – commented Adam Parker of Trivariate Research, in an interview with CNBC – The market has rallied strongly this quarter, and there is a fear that the (economic) context is slowing down. So I think there is an attempt to balance risk and reward and I believe that fears about the slowdown in the Chinese economy have been an excuse for some to lean towards some profit taking, after the earnings recorded in the quarter”.
The home price index for the top 20 US metropolitan areas, known as the S&P CoreLogic Case-Shiller US National Home Price NSA Index, was announced before the start of the session. The figure rose in September by 10.4% on an annual basis, confirming the solidity of the US real estate market.
However, the increase was less than the 10.9% growth expected by analysts polled by Dow Jones. Also evident is the slowdown compared to the 13.1% year-on-year rise of the previous month.
Of the 20 main American cities, the ‘hottest’ real estate market was that of Miami, where house prices recorded a leap of 24.6% on an annual basis: not exactly a trend, one might say, which will have pleased to Jerome Powell’s Fed, who expects to see more sustainable signs of a slowdown in the economy and, therefore, in inflation.