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European stocks slip on Evergrande woes, weak German business morale

Stock MarketsSep 24, 2021 17:20
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© Reuters. The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, September 23, 2021. REUTERS/Staff

By Sruthi Shankar and Shreyashi Sanyal

(Reuters) -European stocks fell on Friday as worries about troubled property developer China Evergrande and weak German business confidence data prompted investors to book some profits after a mid-week rally.

European sportswear makers Adidas (DE:ADSGN), Puma and JD Sports fell about 3% each after U.S. rival Nike (NYSE:NKE) cut its fiscal 2022 sales expectations and predicted delays during the holiday shopping season due to a supply chain crunch.

Retail stocks were the top decliners in Europe, down 1.7%, while the region-wide STOXX 600 fell 0.9%. But a three-day rally put the index 0.3% higher for the week.

"Equities have rallied to take a pause early this morning faced with the likely default of Evergrande," said Sebastien Galy, senior macro strategist at Nordea Asset Management.

Investor worries over Evergrande resurfaced as a deadline for paying $83.5 million in bond interest passed without remark from the company, putting it closer to a potential default.

Meanwhile, a survey by Ifo Institute showed German business morale in September fell for a third straight month, hit by supply chain woes that are causing a "bottleneck recession" for manufacturers in Europe's largest economy.

Germany's DAX fell 0.7%, heading into the weekend when the country will vote to elect German Chancellor Angela Merkel's successor.

Latest polls showed the Social Democrats were clinging to a narrow lead over the conservative CDU/CSU alliance, while the Greens trailed. [nS8N2OY01Q]

"Some of the hesitancy in European markets could also be put down to the German elections, which promise to be the most interesting in some time," said Chris Beauchamp, chief market analyst at IG.

"Markets are facing a change of direction in Germany unlike anything seen in the past decade or more, and the end of Merkel's tenure promises to be a watershed moment for the EU and global investors alike."

The benchmark STOXX 600 is on course to end September in the red after seven consecutive months of gains as rising energy prices and supply-chain bottlenecks fed into fears of inflation, while major central banks plan to cut pandemic-era stimulus.

However, European Central Bank President Christine Lagarde said in an interview aired on CNBC that many of the drivers of a recent spike in euro zone inflation are temporary and could fade in the next year.

British drugmaker AstraZeneca (NASDAQ:AZN) rose 2.0% after the company said its cancer drug Lynparza met its primary goal in a late-stage trial.

Italy's utilities Enel (MI:ENEI) and Eni inched higher after the government set aside more than 3 billion euros ($3.5 billion) to curb a strong increase in retail energy bills.

European stocks slip on Evergrande woes, weak German business morale
 

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Comments (2)
Fong SH
Fong SH Sep 25, 2021 2:45
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The media & reports shouldn't keep using China Evergrande crisis as an excuse to harm or scare tactics in world financial markets. China Evergrande crisis is within China itself. Even FED Chairman said its within China itself. Please get your facts right.
David Hawley
David Hawley Sep 24, 2021 8:49
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FGS...no one was worried about Evergrande yesterday and everyone was feeling optimistic about growth in the global economy. Taking the view that if the fed is about to ease stimulus then everything should be good. FGS
ThisIs Sparta
ThisIs Sparta Sep 24, 2021 8:49
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They make up new headlines each day... tomoorow it will be about the U.S 10Y moving north sharply!!
Cedric Cedric
Cedric Cedric Sep 24, 2021 8:49
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I bet you evergrande paid their interests on Thursday as per instructed by chinese regulators , but not reported for more fud !
 
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