BANGKOK (AP) – European stocks and US futures rose on Monday after a lackluster day in Asia, where stocks fell in Hong Kong and Shanghai after struggling Chinese real estate developer Evergrande warned it could running out of money.
Take action to reassure investors and avoid blocking growth, The central bank of China reduce the amount of funds that banks are required to keep in reserve. This freed up 1.2 trillion yuan ($ 190 billion) for banks to lend.
Meanwhile, investors are also grappling with uncertainty over the latest variant of the coronavirus and when the Federal Reserve will end its support to the markets.
“This is a week that will force an uncomfortable reflection on the ‘known unknowns’ primarily associated with omicron, Fed tightening and China’s (regulatory / real estate) risks,” Mizuho Bank said in a comment.
This will bring even more uncertainty after a tumultuous period last week, he said.
The German DAX jumped 0.9% to 15,298.76 while the CAC 40 in Paris climbed 0.8% to 6,820.83. The UK FTSE 100 rose 0.8% to 7,181.36. The future of Dow industrials was up 0.8%, while the contract for the S&P 500 gained 0.6%.
Chinese regulators rushed to reassure investors after Evergrande, one of China’s biggest developers, said he might run out of money to “meet his financial obligations” as he struggles to bow to pressure to reduce his $ 310 billion debt.
The concern is that unsustainable debt levels in the real estate sector could trigger a financial crisis. China wants to avoid a bailout, but it is also unlikely that the situation will deteriorate to the point where problems cascade down to that level.
A number of real estate companies have run into problems as the government lobbied to reduce debt levels, but officials have issued statements saying China’s financial system is strong and default rates are low. Most of the developers are in good financial health and Beijing will continue to operate in the credit markets, according to the most recent statements.
Hong Kong-traded Evergrande shares plunged 19.6% on Monday, helping push the Hang Seng Index down 1.8% to 23,349.38. The Shanghai Composite Index dropped its early gains, losing 0.5% to 3,589.31.
India’s benchmark fell 1.7% and Taiwan’s also edged down. Thai markets were closed for a public holiday.
In Tokyo, the Nikkei 225 lost 0.4% to 27,927.37. But the S & P / ASX 500 in Sydney ended slightly higher, gaining 0.1% to 7,245.10. In Seoul, the Kospi rose 0.2% to 2,973.25.
Chinese tech giant Ali Baba, which was embroiled in a multi-faceted crackdown on the industry, lost 5.6% after the company announced it was replacing CFO Maggie Wu and restructuring its e-commerce business.
Last week’s volatile swings on Wall Street ended on Friday with more losses for stocks, as a mixed batch of US labor market data sparked another dizzying trading episode.
The S&P 500 closed 0.8% lower at 4,538.43. The Dow Jones lost 0.2% to 34,580.08. The Nasdaq fell 1.9% to 15,085.47, while the Russell 2000 fell 2.1% to 2,159.31.
Friday’s jobs report, which is typically Wall Street’s most anticipated economic data each month, showed employers added only 210,000 jobs last month. Economists had expected much higher hiring of 530,000 people, raising fears of stagnation in the economy as inflation remains high. This is a worst-case scenario called “stagflation” by economists, and the the arrival of the omicron variant makes its probability more uncertain.
In other trading on Monday, benchmark US crude oil rose $ 2.00 to $ 68.26 a barrel in electronic trading on the New York Mercantile Exchange. It lost 24 cents to $ 66.26 on Friday.
Brent crude, the standard for international oil pricing, rose $ 1.85 to $ 71.73 per barrel.
The US dollar rose from 112.92 yen to 113.26 Japanese yen. The euro weakened to $ 1.1297 from $ 1.1309.
Elaine Kurtenbach, The Associated Press