reliefstocksWorld News

Stocks find relief in Evergrande deal


Investing.com - Financial Markets Worldwide

Please try another search

ReutersStock Markets17 minutes ago (Sep 22, 2021 04:16AM ET)

2/2


© Reuters. FILE PHOTO: An investor sits in front of a board showing stock information at a brokerage office in Beijing, China, December 7, 2018. REUTERS/Thomas Peter/File Photo

2/2

By Tom Wilson and Tom Westbrook

LONDON/SINGAPORE (Reuters) – Stocks and riskier currencies found relief on Wednesday as market jitters around China Evergrande eased, with the embattled developer saying it could pay a coupon on one of its bonds.

The Euro added as much as 0.8% in early trading, with London shares up 1.1% and Paris gaining 1.2%. Evergrande’s Frankfurt-listed shares jumped 15.1% after hitting multi-year lows a day earlier.

U.S. futures were set to gain 0.6%, with investors focused on the Federal Reserve’s policy decision due later in the day, with concern over an immediate announcement on tapering easing in recent weeks.

Global investors have worried over a possible default by China’s No. 2 property developer, with concerns about the spillover from a messy collapse upsetting markets this week.

Yet on Wednesday Evergrande’s main unit said it had settled interest payments due on Thursday on a yuan bond with investors.

The news sent benchmark bond yields higher, as well riskier currencies such as the Australian dollar and , and kept a cap on the dollar. Still, traders were left with few details and Evergrande made no mention of dollar bond interest also due on Thursday.

The MSCI world equity index, which tracks shares in 50 countries, eked out slim gains.

“This could be a bit of a relief rally,” said Matteo Cominetta, economist at Barings Investment Institute.

“Of course some bondholders may lose some money but the contagion potential of Evergrande in terms of your bank debt, bond debt are quite limited.”

As risk sentiment returned, yields on safe-haven 10-year U.S. Treasuries rose and then eased back to flat at 1.3311%. Euro zone bond yields also edged higher, while the safe-haven yen eased slightly.

Globally, markets had already started to calm as analysts downplayed the threat of Evergrande’s troubles becoming a “Lehman moment” and setting off a financial crisis.

Analysts said the focus now seems to be shifting to trying to gauge Beijing’s so-far muted response amid worries about the consequences for a Chinese economy that is slowing and financial markets reeling from months of disruptive and radical reform.

Returning from a two-day holiday, China shares fell, though a cash injection from the People’s Bank of China kept falls far smaller than feared. Blue chips off 0.7% and reversing losses to trade up 0.3%.

That weighed on MSCI’s broadest index of Asia-Pacific shares outside Japan, which fell 0.3%.

AUSSIE UP, DOLLAR FLAT

In currency markets, the Australian dollar rose as much as 0.5% to $0.7268 before giving up part of the gains to trade up 0.2% on the day.

The slipped slightly to 93.189, staying not far off Monday’s one-month high of 93.455.

Moves were capped ahead of Wednesday’s Fed meeting, however, and the dollar was flat against the euro, with the risk of a hawkish Fed supporting the dollar.

Most analysts think the Fed will not go into detail about its tapering plans but say risks lie in board members’ “dot plot” of rates projections.

“Investors are not pricing in some huge hawkish surprise but are expecting tapering discussions, and tapering, to commence later this year, maybe in November, and interest rate lift-off to happen towards the end of next year,” said Salman Baig, portfolio manager at Unigestion.

The outcome of the Fed’s meeting is announced at 1800 GMT with a news conference half an hour later.

Digital currencies bitcoin and ether, buffetted by volatility in recent days, added 4% and 6% respectively.

Related Articles

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

tp

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button
Close
Close