- European stocks and US futures are falling amid global risk appetite
- Hong Kong benchmark falls 2% due to the crackdown by China gaming
- Dollar stable, euro up ahead of the ECB’s monetary policy meeting
- Oil level, aluminum at 13-year high, gold collapses
LONDON, September 9 (Reuters) – Global equity markets slumped for the third straight year on Thursday as Beijing struck another blow at its big tech companies, while bond markets later steered at signals from the European Central Bank about a gradual reduction in incentives.
Europe’s regional STOXX 600 (.STOXX) flirted with a six-week low in early trading while Chinese tech giants Tencent, NetEase and Alibaba rose 6%, 7%, respectively, adhering to tough new rules for the industry overnight. Continue reading
Analysts assume that the ECB will later announce a symbolic step to reduce its emergency economic aid.
The central bank has pulled out all the stops to prop up the eurozone through the coronavirus pandemic, but with inflation at a 10-year high, unemployment falling and the resumption of normal life, politicians are now facing a balancing act.
“The market consensus now is that there will be some reduction in the ECB (withdrawal of stimulus),” said Jane Foley, Rabobank’s chief currency strategist.
Investors were initially startled by the idea of tapering, but ECB officials have worked hard over the past few weeks to reassure markets that the process will be very gradual.
A Reuters poll only expects a slight slowdown in money printing – from currently 80 billion euros to 70 billion euros per month – and this would remain at a high pace by historical standards. Continue reading
“I think the bottom line now is that this is going to be a pretty low-key lagarde,” added Foley. “Which means that the euro cannot get a lot of support,” even if it reflexively goes up.
Eurozone bond yields, reflecting government borrowing costs and driving financial market lending rates, stayed near the eight-week high.
Germany’s 10-year yield, the benchmark for the block, remained unchanged at -0.32%. Italy’s 10-year yield rose less than a basis point to 0.76%, while the euro climbed to $ 1.1827 for the first time in four days.
CAUTION! FRAGILE CHINA
Back on the stock markets, it wasn’t just about the ECB.
The UK’s FTSE 100 (.FTSE) led the loss in Europe with a 1.1% decline. Low-cost airline easyJet (EZJ.L) slumped nearly 14% as it tapped on shareholders for £ 1.2 billion ($ 1.66 billion). The broader travel sector was down 1.8%.
MSCI’s broadest index for Asia Pacific stocks (.MIAP00000PUS) was last down 1% in what would be its worst daily performance since August 19, when markets last decided they were concerned the Federal Reserve was getting its massive Restricts asset purchase program.
U.S. stock futures, the S&P 500 e-minis, fell 0.25% after Apple and Facebook slumped on Wednesday and a Federal Reserve policymaker urged the central bank to proceed with its own plans to wind down stimulus programs .
“The global story looks weak and is being hit by the Delta variant and concerns that the Fed may still be tapering,” said Rob Carnell Asia Head of Research at ING. “It’s a disturbing combination of things.”
China fear also played a big role in the declines in Asia on Thursday.
Hong Kong (.HSI) was among the biggest losers, with a 2.02% loss dragged down by Chinese technology stocks after Chinese authorities told gambling companies false tendencies like “money only” and “only on the traffic ”.
This hurt companies with large gaming companies, and Tencent (0700.HK) fell 6%, Bilibili (9626.HK) lost 6.6% and NetEase (9999.HK) lost 7.4%.
There was also more trouble for the country’s most heavily indebted real estate giant, Evergrande (3333.HK).
According to media reports, the company would suspend some interest payments on loans and payments to its wealth management products would weigh on its shares, which fell more than 10%. The bond, traded in Shenzhen in January 2023, has been halted after falling more than 20%. Continue reading
The Korean kopsi (.KS11) fell 1.5%, also under pressure from regulatory scrutiny from local tech companies. In the case of Korea, fintech names like Kakao Corp (035720.KS) were in the spotlight, down 7.2% and Naver Corp (035720.KS), down 6.9%.
Australia (.AXJO) lost nearly 2% after headcount showed a sharp downsizing in the first half of August.
It was quieter on the commodity markets. Oil prices remained stable as production in the U.S. Gulf of Mexico slowly resumed after Hurricane Ida, while aluminum hit a 13-year high, in part in response to a coup in Guinea, one of the world’s leading bauxite producers.
“The political unrest in Guinea has significantly increased the risk of disruption. At the same time, electricity shortages and environmental measures are limiting production in China, ”said ANZ analysts in a press release.
Evergrande’s bonds collapse due to concerns about default
($ 1 = 0.7246 pounds)
Reporting by Marc Jones. Adaptation by Jane Merriman
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