China's Stock Slump May Be Bottoming Out as Wall Street Rally Signals Rate Hopes

China’s equity markets just posted a brutal two-day washout, with the Shanghai Composite tanking nearly 3% and the Shenzhen Index crashing over 3.4% as financial stocks, materials, and property names got hammered. But here’s the thing: Monday could paint a different picture.

Wall Street’s Friday surge is sending positive vibes across the region. The major U.S. indices rallied hard in the afternoon—Dow +1.08%, S&P 500 +0.98%, NASDAQ +0.88%—fueled by dovish signals from New York Fed President John Williams hinting the Fed might cut rates in December. Add in softer inflation expectations from University of Michigan, and you’ve got momentum.

The Shanghai Composite currently hovers around 3,835 points after Friday’s 96-point dump. Shenzhen hit 2,370—both taking serious hits from the selloff in Big Tech, banks, and materials (Chalco plummeted 4.71%, Jiangxi Copper nosedived 3.91%).

Here’s what matters: If the U.S. enthusiasm sticks around and rate-cut chatter heats up, Asia typically follows. Energy prices cracked on Friday—crude down 1.46% to $58.14 per barrel on Ukraine-Russia peace plan optimism—which could ease inflation fears.

Bottom line? Chinese markets are oversold but might find a bid if Wall Street’s newfound bullishness holds. The question is whether Beijing’s policy makers step in to provide support or let the market find its own floor.