Global stocks are mixed as Chinese central bank prepares to boost markets
European stocks and US futures rose on Monday after a lackluster day in Asia, where stocks fell in Hong Kong and Shanghai after struggling Chinese real estate developer Evergrande warned he could run out of money.
In an effort to reassure investors and prevent growth from stagnating, China’s central bank has reduced the amount of funds banks must keep in reserve. This freed up 1.2 trillion yuan ($ 190 billion) for banks to lend.
Meanwhile, investors are also grappling with uncertainty over the latest variant of the coronavirus and when the Federal Reserve will cut support to markets.
It’s a week that will force uncomfortable thinking about the known unknowns primarily associated with the omicron, Fed tightening and China’s (regulatory / ownership) risks, Mizuho Bank said in a comment.
This will bring even more uncertainty after a tumultuous period last week, he said.
The German DAX jumped 0.9% to 15,298.76 while the CAC 40 in Paris climbed 0.8% to 6,820.83. The UK FTSE 100 rose 0.8% to 7,181.36. The future of Dow industrials was up 0.8%, while the contract for the S&P 500 gained 0.6%.
Chinese regulators have rushed to reassure investors after Evergrande, one of China’s biggest developers, said it may run out of money to meet its financial obligations as it struggles to bow to pressure to reduce its $ 310 billion debt.
The concern is that unsustainable debt levels in the real estate sector could trigger a financial crisis. China wants to avoid a bailout, but it is also unlikely that the situation will deteriorate to the point where problems cascade down to that level.
A number of real estate companies have run into problems as the government lobbied to reduce debt levels, but officials have issued statements saying China’s financial system is strong and default rates are low. Most of the developers are in good financial health and Beijing will continue to operate in the credit markets, according to the most recent statements.
Hong Kong-traded Evergrande shares plunged 19.6% on Monday, helping push the Hang Seng Index down 1.8% to 23,349.38. The Shanghai Composite Index dropped its early gains, losing 0.5% to 3,589.31.
India’s benchmark fell 1.7% and Taiwan’s also edged down. Thai markets were closed for a public holiday.
In Tokyo, the Nikkei 225 lost 0.4% to 27,927.37. But the S & P / ASX 500 in Sydney ended slightly higher, gaining 0.1% to 7,245.10. In Seoul, the Kospi rose 0.2% to 2,973.25.
Chinese tech giant Alibaba, which has been embroiled in a multi-faceted crackdown on the industry, lost 5.6% after the company announced it was replacing CFO Maggie Wu and restructuring its trading business. e-commerce.
Last week’s volatile swings on Wall Street ended on Friday with more losses for stocks, as a mixed batch of US labor market data sparked another dizzying trading episode.
The S&P 500 closed 0.8% lower at 4,538.43. The Dow Jones lost 0.2% to 34,580.08. The Nasdaq fell 1.9% to 15,085.47, while the Russell 2000 fell 2.1% to 2,159.31.
Friday’s Jobs Report, which is typically Wall Street’s most anticipated economic data each month, showed employers added just 210,000 jobs last month. Economists had expected a much stronger hiring of 530,000 people, raising fears of stagnation in the economy as inflation remains high. It’s a worst-case scenario called stagflation by economists, and the arrival of the omicron variant makes its probability more uncertain.
In other trading on Monday, benchmark US crude oil rose $ 2.00 to $ 68.26 a barrel in electronic trading on the New York Mercantile Exchange. It lost 24 cents to $ 66.26 on Friday.
Brent crude, the standard for international oil pricing, rose $ 1.85 to $ 71.73 per barrel.
The US dollar rose from 112.92 yen to 113.26 Japanese yen. The euro weakened to $ 1.1297 from $ 1.1309.
(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)