When the Dragon sneezes, Europe catches a cold By Reuters
A look at the day ahead from Danilo Masoni.
Markets around the globe are beginning to worry as China’s tech moguls and economic growth stagnate increase pressure. It’s Europe with its supercharged luxury stocks and export-oriented economy that will feel the greatest pain.
The index has fallen 1% so far in September, twice as much world stocks, and while Europe broadly is still in favour with investors and research analysts, the index has slipped all the way down to July lows.
Wall Street may see a rebound this morning due to Wall Street’s recent strength, but China is still in serious trouble.
China’s Number. Evergrande 2 is a property developer and has caused its shares to fall to decade levels, which in turn has driven Asian stock markets into their fourth day without a gain. Evergrande bonds cannot be traded. The Mid-Autumn Festival is a cloudy week due to virus outbreaks.
Europe Inc also faces problems internally. In response to rising power prices, Spain has decided to cap its energy costs and Italy stated on Thursday that they are planning “short term measures” to mitigate the rises in price. There are concerns that other countries could take similar steps — and at the cost of utilities firms.
The market is showing some support due to signs that U.S. inflation has peaked. Also, the largest economy in the world appears to be strong. The health of the biggest economy on earth will also be monitored by retailers later.
Graphic: Morning Bid – https://fingfx.thomsonreuters.com/gfx/mkt/jnvweywoxvw/morning%20bid.JPG
Key developments that should provide more direction to markets on Thursday:
Japan’s hot exports growth cools as COVID-19 hits supply chains
Philip Morris (NYSE:) seals deal to buy UK’s Vectura with 75% stake tendered; French utility Veolia launches 2.5 bln euro capital increase[nL1N2QI0D1; Vivendi (OTC:) paves way for Lagardere takeover
German car registrations Aug
ECB Speakers: Christine Lagarde
Norges Bank Governor Oystein Olsen speaks
Egypt central bank meeting
U.S. weekly jobless claims/Philly Fed September
U.S. Retail sales/business inventories
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