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World shares sink as China Evergrande fears spark risk off

EconomySep 21, 2021 02:01
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2/2 © Reuters. FILE PHOTO: A man looks at a board showing stock prices outside a brokerage in Tokyo, Japan, January 6, 2020. REUTERS/Kim Kyung-Hoon 2/2

By Lewis Krauskopf and Tom Arnold

(Reuters) - World stocks sold off sharply on Monday while safe-haven assets gained as troubles at property group China Evergrande fed concerns about spillover risks to the economy, sparking fresh investor worries ahead of a busy week of central bank meetings.

MSCI's gauge of stocks across the globe shed 1.63%, its biggest one-day percentage fall day in about two months, as Wall Street's benchmark S&P 500 sagged 1.7% and the tech-heavy Nasdaq tumbled 2.2%.

Investors moved into safe havens, with U.S. Treasuries gaining in price, pulling down yields, and gold rising.

Shares in Evergrande, which has been scrambling to raise funds to pay its many lenders, suppliers and investors, closed down 10.2% at HK$2.28.

Regulators have warned that its $305 billion of liabilities could spark broader risks to China's financial system if its debts are not stabilized.

“It started with the problems with the China Evergrande real estate company and I think it just has become a contagion,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

"Everybody was kind of afraid of September for this very reason," Tuz said. "It seems to be the month that... you have significant selloffs and here we go.”

On Wall Street, the Dow Jones Industrial Average fell 614.41 points, or 1.78%, to 33,970.47, the S&P 500 lost 75.26 points, or 1.70%, to 4,357.73 and the Nasdaq Composite dropped 330.07 points, or 2.19%, to 14,713.90.

Economically sensitive sectors, including financials and energy, were hit particularly hard. Still, stocks pared losses late with U.S. indexes ending above their session lows.

The pan-European STOXX 600 index lost 1.67%, with mining stocks sliding.

The selloff on Monday has seen a cumulative $2.2 trillion of value wiped off the market capitalization of world equities from a record high of $97 trillion hit on Sept. 6, according to Refinitiv data.

(GRAPHIC: China CDS - https://fingfx.thomsonreuters.com/gfx/mkt/jnpweyarzpw/cds.PNG)

Worries over Evergrande come as a rally in equities has stalled recently with investors focused on the impact of coronavirus cases on the economy, and when central banks will ease back on monetary stimulus.

The U.S. Federal Reserve is due to meet on Tuesday and Wednesday as investors look for when it will begin pulling back on its bond purchases.

Investors were also keeping an eye on other central bank meetings spanning Brazil, Britain, Hungary, Indonesia, Japan, Norway, the Philippines, South Africa, Sweden, Switzerland, Taiwan and Turkey.

In currency trading, the dollar index rose 0.02%, with the euro up 0.01% to $1.1726.

The offshore Chinese yuan weakened versus the U.S. currency to its lowest level in nearly a month.

Benchmark 10-year notes last rose 16/32 in price to yield 1.3158%, from 1.37% late on Friday.

The iShares exchange-traded fund tracking high-yield corporate bonds fell 0.4%.

U.S. crude settled down 2.3% at $70.29 per barrel and Brent settled at $73.92, down 1.9% on the day.

Spot gold added 0.6% to $1,764.30 an ounce, rising off of a one-month low.

World shares sink as China Evergrande fears spark risk off
 

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Comments (5)
mushaf munas
mushaf munas Sep 20, 2021 20:22
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Crash everything folks…. China, US and Europe. Hey Russia… make gain of this opportunity mate. Squeeze the Gas, palladium and other natural prices. Way to go up those commodity prices.
John Jones
John Jones Sep 20, 2021 16:39
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Plus FED-fear.
Fong SH
Fong SH Sep 20, 2021 15:16
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World shares skid because of China's Evergrande fears - what a lousy headline. Compared to what happened to Lehman Brothers' crisis in 2007, just a chip off a stone. Failure is the key to success. If today Evergrande would have achieved something big, the headlines might read - pirate, fraud, suspicious projects & so forth. Come on, it's not like Evergrande is going bring down the world's financial markets, unlike Lehman, she sent ripples through every part of the world's financial markets. Let's be fair. Business shouldn't mixed with politics. Cheers!
Theo Marshall
Theo Marshall Sep 20, 2021 12:28
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China seems to be faltering.
Usman Suraj
Usman Suraj Sep 20, 2021 11:04
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I like this
 
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