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Wall Street closes down, China and the Fed take your breath away

The New York Stock Exchange closed lower on Monday, worried about the possible consequences for the Chinese economy of the protest movement underway in the country, as well as the proactive statements of American central bankers.

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The Dow Jones lost 1.45%, the Nasdaq index 1.58% and the broader S&P 500 index lost 1.54%.

“The market seems focused on China’s zero-Covid policy and little else,” commented Art Hogan of B. Riley Wealth Management.

After the spontaneous demonstrations of recent days, to ask for the total or partial lifting of the health restrictions linked to the resurgence of the coronavirus, the Chinese government responded on Monday by deploying huge police forces, particularly in Shanghai and Beijing.

“We started off on the wrong foot with the protest in China and then we had several Fed (US central bank) members make offensive exits, with harsh language on monetary tightening,” explained Jack Ablin, of Cresset Capital.

“There is still work to be done” in terms of monetary tightening, estimates the president of the New York branch, John Williams, for whom curbing inflation “will take time”.

“We still have a long way to go,” said James Bullard, president of the St. Louis branch, for whom the Fed’s policy rate must rise to at least a range of 5% to 5.25%, against the 3.75% to 4%. currently.

“Everything seems to be heading towards less risk-taking” by investors, according to Jack Ablin, with in particular a negative wind on commodities and an appreciation of the dollar, the safe haven asset par excellence.

The VIX index, which measures market volatility, rose more than 8% on Monday.

According to Art Hogan, the operators’ caution can also be explained by the week’s programme, full of indicators and interventions by central bankers, in particular by the president of the Fed, Jerome Powell, on Wednesday.

It will be followed by the release of the PCE consumer price index on Thursday, followed by the monthly US jobs report on Friday.

“The three should be satisfactory for the market to find a way for a rebound,” warned Art Hogan, namely slowing inflation, a still-robust job market and a measured tone from Jerome Powell.

In this spirit of anticipation, the bond market has been very sluggish. The 10-year US government bond yield remained unchanged at 3.67%.

In line with the price of black gold, depressed for most of the day by China before recovering right at the close of the session, oil companies such as ExxonMobil (-3%) and Herringbone (-2.91%) suffered on Monday .

Other giants in the extraction and processing of raw materials such as the Freeport-McMoRan mining company (-2.58%) or the US Steel (-1.43%) have suffered a firedamp blow, proportional to the uncertainty that weighs on the Chinese question.

On the technology front, Apple (-2.63% to $144.22) continues to suffer from the crisis in China, where the main iPhone manufacturing plant is located, in Zhengzhou (center), which should limit its supplies of mobile phones stellar.

Casino giants Wynn Resorts (+4.36%) and Las Vegas Sands (+1.11%) benefited from the renewal of their operating license by the Macau authorities for 10 years, unlike MGM Resorts (-2.27%), which however also received the precious sesame.

After a strong “Black Friday” for online sales, Amazon (+0.58%) and the supermarket chains Walmart (+0.29%) or Target (+1.22%), very present in e-commerce , have overcome the prevailing torpor.

Disney (-3.22% to $95.69) paid for the failure of its latest animated film “Avalonia: The Strange Journey” (“Strange World”) for its North American theatrical launch weekend.

According to various experts, quoted by the specialized site Variety, the bad performance of this feature film could lead to a loss of at least 100 million dollars for the entertainment giant.

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