Evergrande worries? Not really By Reuters
A look at the day ahead from Tommy Wilkes.
Although China Evergrande’s problems with its property empire, China Evergrande, an over-indebted giant of the real estate industry has been in the making for some time now. However, the lackluster reaction from markets around the world to this dramatic turn in fortunes has surprised many.
Investors believe that Evergrande’s likely failure to pay the $80 million coupon due next week will be contained. However, bankers warn that things may get more complicated if the state intervenes to buy assets.
While Evergrande’s share price is down by 35% this week, there have been gains elsewhere in China (including in tech stocks) on Friday despite the small impact.
The previously bruised Tech Index enjoyed its best day in three-and-a-half weeks, while broader Asian indexes are ending the week where they started.
With a host of central bank meetings scheduled next week, which include the Federal Reserve as well as the Bank of Japan meeting, stock markets around the world are nervous about the economy and trying to find out when policymakers will stop using the stimulus pumps from the Pandemic Era.
Evergrande is a bit of an afterthought for investors because it focuses on the outlook, and there’s a general worry about how this year’s stock markets will perform.
The weak Chinese data, which suggests that China’s second largest economy is slowing down, seems to be a greater concern.
On Friday, European and U.S. shares are set to open higher after a mixed week — the is now down just 0.2% for the week but remains more than 1% off record highs after last week’s jitters.
European shares appear to be heading for their third week in losses. However, there has not been widespread selling.
The dollar was able to hold steady at three weeks after the surprisingly strong retail sales figures in the United States. This increased bets that Fed tightening will occur sooner than expected.
Although oil prices fell after more supplies returned online in the U.S. Gulf of Mexico, prices are still up this week.
Retail sales https://graphics.reuters.com/USA-STOCKS/lbpgngbgjvq/retailsales.png
Key developments that should provide more direction to markets on Friday:
-UK retail sales in surprise August fall
-Euro area HICP, core inflation
-Azerbaijan central Bank meeting
-University of Michigan inflation expectations
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