GLOBAL MARKETS-Evergrande, global growth worries dampen stocks

  • 9/17/2021
  • 00:00
  • 5
  • 0
  • 0
news-picture

* U.S. stock futures down 0.3% * Evergrande down 30% this week * German 10-year bond yields hit 2-month high * Dollar close to previous session’s 3-week high LONDON, Sept 17 (Reuters) - Stock index futures showed Wall Street was set for a weaker open while world shares were heading for a weekly loss on Friday on China jitters and global growth concerns, though strong U.S. retail sales data boosted the dollar. Shares in embattled property developer China Evergrande , which has two trillion yuan ($310 billion) in liabilities and faces an $80 million bond coupon payment next week, dropped a further 3.4% on Friday, down 30% this week. The editor-in-chief of state-backed Chinese newspaper Global Times warned Evergrande that it should not bet on a government bailout on the assumption it is “too big to fail”. “The underlying risk for markets is if Evergrande is not bailed out by the Chinese government,” said Giles Coghlan, chief currency analyst at HYCM, though he added: “I don’t think Evergrande is a Lehman scenario - it’s not going to be a massive systemic risk.” U.S. stock futures, the S&P 500 e-minis fell 0.3%, after the S&P 500 index dropped 0.17% in the previous session. MSCI’s world equity index was flat at 735.46, down 0.25% on the week. The index hit a record high of 749.16 on Sept 7. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.27% but was on course to finish down 2.6% on the week, which would be its worst week in four. The pan-European STOXX 600 index and the FTSE 100 both dipped 0.23%. Stock market prices were expected to be erratic on Friday due to “quadruple witching” day, when four different futures and options contracts expire. Chinese data earlier this week suggested growth in the world’s second-largest economy will slow in the second half of this year, while economists polled by Reuters said they expected the U.S. economic rebound to have been dented in the third quarter, partly due to the spread of the Delta coronavirus variant. The Federal Reserve, facing a labor market that may be stalling or on the cusp of a surge, is expected next week to open the door to reducing its monthly bond purchases while tying any actual change to U.S. job growth in September and beyond. “There remains an underlying tension with concerns about the growth outlook and central bank tightening weighing on sentiment,” said Seema Shah, chief strategist at Principal Global Investors. “Perhaps there is too much caution – although growth in the U.S. and likely in Europe is slowing, it will still be at a solid pace – but the combination of slowing growth and tightening monetary policy will inevitably weigh on returns going forward.” However, stronger than expected U.S. retail sales data on Thursday boosted the dollar, which held steady near the previous day’s three-week high against an index of currencies. The euro rose 0.12% to $1.1776. The yield on Germany’s 10-year government bond, the benchmark for the euro zone, was at -0.280% after rising as much as 3.5 basis points to a two-month high of -0.277%, after a Financial Times report suggested the European Central Bank expects to hit its 2% inflation target by 2025. ECB governing council member Gabriel Makhlouf said on Friday he expected similar levels of inflation in the coming months, after a 3% rise in August. The yield on benchmark 10-year Treasury notes was little changed at 1.3395%. In Asia, Hong Kong’s Hang Seng Index and Chinese blue chips rose 1% and Japan’s Nikkei gained 0.58% to head back towards a 31-year high hit on Monday. U.S. crude fell 0.56% to $72.20 a barrel, and Brent crude dropped 0.41% to $75.36 per barrel, as more supply slowly came back online in the U.S. Gulf of Mexico following two hurricanes. Gold was trading at $1,759 per ounce, up 0.37% after falling 2.3% on Thursday as higher yields hurt the non-interest bearing metal. ($1 = 109.8700 yen) ($1 = 6.4502 Chinese yuan renminbi)

مشاركة :