Didi’s delisting could spell the end for Chinese stocks on Wall Street

A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.What’s happening: China’s Didi announced Friday that it will “immediately” start the process of delisting from the New York Stock Exchange and pivot to Hong Kong.Coming just months after the ride-hailing giant’s Wall Street debut, the news sends a clear signal to investors as tensions between Washington and Beijing generate uncertainty.

“Didi’s repatriation to [Hong Kong] is a significantly worrying indicator for the larger US-Sino economic relationship,” Brock Silvers, chief investment officer at Kaiyuan Capital in Hong Kong, told me. “Beijing essentially forced Didi’s hand.”Shortly after its $4.4 billion initial public offering in the United States in late June, Chinese regulators banned Didi from app stores in China, saying it broke data privacy laws and posed cybersecurity risks. Its share price collapsed.The decision to target Didi was widely seen as punishment for its decision to go public overseas, and the company became a prime example of China’s efforts to curb the power of Big Tech firms.Didi’s situation is set to spark a broader reassessment of Chinese companies that have listed shares abroad — including Alibaba, Pinduoduo, Baidu, JD.com, Nio (Such a reading could bolster the Federal Reserve’s resolve to accelerate the pace at which it ends its crisis-era bond buying program. Chair Jerome Powell said earlier this week that the Fed was considering shutting it down faster to rein in inflation. “A strong payroll print could further reinforce the Fed’s recent hawkish pivot,” said Jim O’Sullivan, chief US macro strategist at TD Securities.But strategists will be scrutinizing more than the headline number to assess the state of the job market.The labor force participation rate, which tracks the number of working age people actively seeking employment, will be carefully monitored as economists track ongoing shortfalls of workers, while data on wage growth could indicate broader pressure on prices.The arrival of the Omicron variant of the coronavirus will also loom over the report, though its early effects won’t show up in the release.Mark Zandi, chief economist of Moody’s Analytics, told me that it’s too early to say just how severe the impact will be.”Future waves of the virus will surely hurt job growth, but there is no way to know how badly as that depends on the size and severity of the wave,” he said. “My sense is that the economic damage caused by each new wave of the virus will be less than the previous wave, as the vaccines and other health care responses become more effective, and economies become more adept at navigating through the waves, but it is of course not hard to construct darker scenarios.”Amid virus uncertainty, what goes down can go up againScientists are racing to determine whether the Omicron variant is more transmissible and if it can evade vaccines. In the meantime, Wall Street doesn’t know what to think.The latest: The S&P 500 rose on Monday then sold off on Tuesday and Wednesday before jumping again on Thursday. The churn was particularly apparent in the travel sector. Shares of Delta Air Lines, the largest US carrier, plunged more than 7% on Wednesday before leaping 9% on Thursday. Marriott fell 3% on Wednesday and then rallied 6% during yesterday’s session.The VIX, which measures S&P 500 volatility, jumped as much as 91% from the beginning of November this week before coming back down slightly, while the CNN Business Fear & Greed Index is in “extreme fear” territory.What next? Investment advisers say cooler heads should prevail for now, but markets remain vulnerable to any news headlines on the variant’s impact on public health or the economy.”Against this uncertain backdrop, we advise investors to avoid a hasty retreat from risk assets, which could undermine long-term returns,” Mark Haefele, chief investment officer at UBS Global Wealth Management, told clients earlier this week.The US jobs report posts at 8:30 a.m. ET.Also today: The ISM Non-Manufacturing Index for November will shine a light on the health of the US services sector. It arrives at 10 a.m. ET.Coming next week: Will consumer prices in America continue to rise at the fastest rate in three decades?