US, European Stocks Rebound After Evergrande-driven Rout

US, European stocks rebound after Evergrande-driven rout

US and European equities rebounded Tuesday after fears over the possible collapse of Chinese property giant Evergrande sparked a rout across global markets

London, (UrduPoint / Pakistan Point News - 21st Sep, 2021 ) :US and European equities rebounded Tuesday after fears over the possible collapse of Chinese property giant Evergrande sparked a rout across global markets.

The Dow Jones Industrial Average, the tech-heavy Nasdaq and the S&P 500 were all around 0.4 percent higher in early trading as Wall Street opened.

In Europe, London stocks advanced 1.1 percent, while Frankfurt and Paris each won 1.4 percent in afternoon trading.

Major European markets had fallen between around one and two percent Monday, similar to drops seen on Wall Street.

The picture was mixed in Asia Tuesday, with Hong Kong closing up 0.5 percent, while Tokyo slumped 2.2 percent and Shanghai was closed for a Chinese public holiday.

"The early contention is that yesterday's reported angst that a debt default by China's Evergrande could trigger systemic risk has been tempered," said analyst Patrick O'Hare.

"Helping in this regard are many pundits suggesting Evergrande is not a 'Lehman moment' and reports that Evergrande's Chairman said the property developer plans to fulfil its responsibilities," O'Hare said, referring to the collapse of the Wall Street giant firm during the 2008 financial crisis.

Evergrande founder Xu Jiayin said in a letter to staff that he "firmly believes Evergrande will be able to step out of the darkest moment soon." On the corporate front, shares in Universal Music, the world's biggest label with a lineup of megastars from The Beatles to Taylor Swift, surged on its stock market debut, giving the company a valuation exceeding $50 billion.

ThinkMarkets analyst Fawad Razaqzada said sentiment also improved after Washington announced that it will lift Covid travel bans on all air passengers in November if they are fully vaccinated and undergo testing and contact tracing.

The news boosted the travel sector.

"The better mood is a reflection of optimism about travel returning to some form of normalcy after the United States announced it will allow fully vaccinated people to travel to the US," Razaqzada said.

Markets are also juggling an expected tightening of US monetary policy, rising Covid infections, a slowing global recovery, elevated inflation and a brewing energy crunch.

- 'Uneven' recovery - The OECD on Tuesday warned of an "uneven" global economic recovery as it lowered its 2021 growth forecasts for the world and the United States while raising the outlook for Europe.

In Asia trading, Hong Kong-listed real estate firms -- which took the brunt of the selling on Monday, tanking more than 10 percent -- eked out gains.

But Evergrande, which has fallen more than 80 percent this year alone, ended further in negative territory.

Attention is on what happens next in the Evergrande saga, with the firm -- wallowing in debts of more than $300 billion -- due to pay interest to bondholders on two notes on Thursday.

Focus this week is also on the Fed's latest policy meeting, with observers predicting it will set out its timetable for tapering the vast bond-buying monetary easing programme that has been a key driver of a global recovery for more than a year.

A battle in Washington to raise the US debt limit was also fuelling concern that the government could miss payments on its debt obligations, sparking a disastrous default.

- Key figures around 1330 GMT - New York - Dow: UP 0.4 percent at 34,090.88 points London - FTSE 100: UP 1.1 percent at 6,978.51 Frankfurt - DAX: UP 1.4 percent at 15,338.16 Paris - CAC 40: UP 1.4 percent at 6,543.02 EURO STOXX 50: UP 1.15 percent at 4,090.04 Hong Kong - Hang Seng Index: UP 0.5 percent at 24,221.54 (close) Tokyo - Nikkei 225: DOWN 2.2 percent at 29,839.71 (close) Shanghai - Composite: Closed for a holiday Euro/dollar: UP at $1.1732 from $1.1726 at 2100 GMT Pound/dollar: FLAT at $1.3657 from $1.3657 Euro/pound: DOWN at 85.77 pence from 85.86 pence Dollar/yen: DOWN at 109.26 Yen from 109.44 yenBrent North Sea crude: UP 0.7 percent at $74.44 per barrelWest Texas Intermediate: UP 0.6 percent at $70.73 per barrel