Nasdaq closes at a near-bear market low

The war in Ukraine has tended to increase uncertainty regarding inflation and growth prospects. When and with what consequences this war will end is pure speculation, but capital markets are expected to build a certain immunity to the headline risks in the coming weeks. The medium- to long-term consequences, on the other hand, could be significant. It is possible that we are at the beginning of a new bloc formation or a new Cold War. This would put a significant damper on globalization and further fuel higher structural inflation. 

US equities finished the mid-week session lower, extending Tuesday’s retreat as investors worried about the impact of China’s reopening on global growth ahead of 2023.  The Dow Jones lost 1.1% and the S&P dropped 1.2% pressured by sharp losses for energy-producing giants amid concerns that the end of China’s zero-Covid policy could induce worldwide restrictions and lower energy demand.  The Nasdaq underperformed once again and slipped 1.4%, hitting a 2022 closing low, as inflation worries continued to lift Treasury yields and hurt rate-sensitive tech companies.  European shares also finished lower, reversing initial gains, with the Euro Stoxx 50 Index down 0.6% 

Summary as at 29.12.2022 

• Asian equity markets fell on Thursday as investors worried about the end of China’s zero-Covid policy that could lead to a rise in cases across the globe and trigger worldwide restrictions.  The prospect of further monetary tightening and a possible recession next year also weighed on sentiment.  Shares in Australia, Japan, Hong Kong and mainland China all declined. 
• European and US equity markets are tipped to move higher when they open on Thursday as they look to reverse part of the losses of the past few days. 

• Oil prices fell in early morning trade, extending losses from the previous session as investors weighed Covid news from China. 
• The US announced that it will require air passengers from China to sow a negative virus test, while Italy said it would test arrivals from the Asian nation and reported that almost half of passengers on two flights from China to Milan tested positive.  
• Tesla CEO Elon Musk told employees that they should not be “bothered by stock market craziness” after the company’s shares tanked nearly 70% this year over jitters on softening demand for electric cars and Musk’s distraction with Twitter.  In an email sent to staff on Wednesday, he said he believes that long term, Tesla will be the most valuable company on earth. 
• US Transportation Secretary Pete Buttigieg said that large-scale flight schedule disruptions at Southwest Airlines were no longer a weather-driven issue and showed a “system failure” within the company.  The rest of the aviation system and other airlines seemed to be back from the weather disruptions, Buttigieg said.