HONG KONG (Businesshala) – Asian shares fell and Treasury yields held firm on Tuesday, as the global energy crisis fueled inflation fears and intensified worries about Evergrande’s debt problems, fueled by US corporate earnings season At first, investor sentiment was clouded.
China Evergrande Group on Tuesday missed its third round of bond coupon payments in three weeks, adding to other property developers intensifying market fears as the wall of debt payment obligations approaches in the near term.
Evergrande’s debt woes have rattled global markets in recent months.
European markets appeared ready to open lower, with pan-regional Euro Stoxx 50 futures down 0.73% and London’s FTSE futures down 0.55%. US stock futures, S&P 500 E-minis, shed 0.33%.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.9%, while Chinese shares also declined.
“Many in the market are currently in wait-and-see mode,” said Zhang Zihua, chief investment officer at Beijing Uni Asset Management. “Investors are keenly watching whether any measures will be taken by Beijing to help solve Evergrande’s debt problem, which will require comprehensive planning.”
Businesshala previously reported that some bondholders said they had not received coupon payments totaling $148 million on Evergrande’s April 2022, April 2023 and April 2024 notes, which were due at 0400 GMT on Tuesday. Rivals Modern Land and Cynic Holdings have also become the latest developers scrambling to delay bond payment deadlines.
China’s blue-chip CSI300 index fell 1.52%, while the coal sub-index dropped 3.8%, amid efforts by the government urging firms to ramp up production.
In Hong Kong, the Hang Seng index fell 1.3%, pulled down by the tech giant.
Elsewhere in Asia, Australian shares fell 0.26%, while Japan’s Nikkei stock index dropped 0.79%.
On Monday, Wall Street’s main indices ended a choppy session as investors panicked ahead of the third-quarter earnings reporting season, with JPMorgan Chase & Co.’s results set to kick off on Wednesday.
Some analysts expect companies to report slower growth due to supply-chain disruptions and rising prices. He warned that this could lead to a fall in US stocks.
Shares of JPMorgan were down 2.1% and were among the biggest drags on the S&P 500, falling 0.69% to 4,361.19. The Dow Jones Industrial Average fell 0.72% while the Nasdaq Composite dropped 0.64%.
After last week’s US data showed weaker-than-expected job growth in September, the focus is now on inflation and retail sales data this week.
“The economy is entering a more challenging phase of the cycle and we expect investors and corporates to monitor how economic data and earnings results fall before assessing near-term direction,” ANZ analysts said in a note. “
Investors also expect the Federal Reserve to begin tightening policy next month by announcing a tapering of its massive bond-buying.
Accelerating inflation and the prospect of a tighter monetary policy boosted bond yields. The yield on the benchmark 10-year Treasury note rose to 1.6137%, while the two-year yield also rose to 0.3499%.
The dollar index, which tracks the greenback against a basket of currencies from other major trading partners, was down at 94.308.
Gold, generally seen as a hedge against inflation, was slightly higher. Spot gold was trading at $ 1761.37 an ounce. [GOL/]
Oil prices extended gains for weeks as a rebound in global demand contributed to energy shortages in economies from Europe to Asia.
US crude rose 0.32% to $80.78 a barrel. Brent crude rose to $83.98 a barrel.