By Peter Nurse
Investing.com - European stock markets traded higher Wednesday, helped by M&A action in the leisure sector and an easing of tensions around embattled Chinese property group Evergrande , ahead of a key Federal Reserve meeting.
At 4 AM ET (0800 GMT), the DAX in Germany traded 0.2% higher, the CAC 40 in France rose 0.7% and the U.K.’s FTSE 100 climbed 0.7%.
Concerns that China Evergrande Group (HK:3333), the country’s second largest property developer, will default on a debt pile that accounts for over 10% of all Asian high-yield debt have recently pressured equity markets around the globe.
Some of these worries were lifted Wednesday after Evergrande's main unit, Hengda Real Estate Group, said it would make a bond interest payment on Thursday after private negotiations with bondholders.
This news doesn’t end the speculation of default, with Evergrande having an $83.5 million interest payment due on Thursday and a second $47.5 million interest payment due next week, but it boosted confidence of avoiding widespread market disorder.
In Europe it was the travel and leisure sector leading the way, with Entain (LON:ENT) stock jumping 7.4% to a new all-time high after the U.K.-based gambling firm revealed a $22 billion takeover proposal from U.S.-based DraftKings (NASDAQ:DKNG).
UBS Group (SIX:UBSG) and HSBC (LON:HSBA) also posted gains Wednesday despite data from Morningstar showing these investment banks, along with fund giant BlackRock (NYSE:BLK), were among the largest buyers of Evergrande debt.
Elsewhere, the Munich-based Ifo institute cut its forecast for German growth this year to 2.5% from 3.3%, reflecting the impact of Delta-variant Covid-19 and supply chain disruptions for local industry. However, it raised its estimate for growth next year to 5.1% from 4.3%.
That said, the day’s main highlight will be the conclusion of the latest Federal Reserve policy-setting meeting, with investors looking to see whether the U.S. central bank clears the way for reductions to its monthly asset purchases later this year.
Crude prices pushed higher Wednesday as industry data pointed to a sharp drop in U.S. oil stocks last week. The American Petroleum Institute reported U.S. crude stockpiles fell just over 6 million barrels last week, a much bigger decline than the 2.4 million barrels expected.
That would be a seventh straight weekly decrease if data from the Energy Information Administration later Wednesday confirms it, and indicative of lingering supply disruptions.
By 4 AM ET, U.S. crude futures traded 1.3% higher at $71.39 a barrel, while the Brent contract rose 1.1% to $75.16.
Additionally, gold futures edged lower to $1,777.45/oz, while EUR/USD edged lower to 1.1721.