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Futures on the S&P 500 and Nasdaq 100 rose, suggesting some improvement in sentiment after concerns about the fallout from China Evergrande Group’s debt problems rocked markets on Monday. Falling buyers in the last hour of trading on Monday helped the S&P 500 cut some losses, although the index still posted the biggest drop since May.
The Stoxx Europe 600 index climbed more than 1%, rebounding from the biggest drop in two months, with energy companies leading and all industrial sectors in the green. Royal Dutch Shell Plc rose after the company offered its shareholders payment on the sale of shale oil fields. Shares of Universal Music Group BV soared on their debut after being separated from Vivendi SE.
Along with concerns about Evergrande’s ability to honor $ 300 billion in liabilities, investors are also positioning themselves for the two-day Fed meeting starting on Tuesday, where policymakers are expected to start laying the groundwork for a plan. stimulus. Treasury yields rose and the dollar remained stable.
“Much of this information is already known that we don’t think it will necessarily trigger a wave of problems,” John Bilton, head of global multi-asset strategy at JPMorgan Asset Management, told Bloomberg TV. “I’m more concerned with the ripple sentiment at a time when investor sentiment is a bit shaky. But when we look at the fundamentals – general growth and the direction of the broader economy – we are still reasonably confident that the situation will turn around on its own. “
A Hong Kong gauge of real estate companies has stabilized, after developers challenged a Chinese government lobby report. Evergrande has slipped deeper into the equity and credit markets. Concerns remain about wider contagion after S&P Global Ratings said the developer was on the brink of default. Chinese markets reopen on Wednesday after the holidays.
The upheaval in China’s real estate sector – part of President Xi Jinping’s broader crackdown on private industries as part of his “common prosperity” initiative to reduce inequality – adds to the risks facing investors. These include stretched stock valuations and a slower economic reopening due to the strain of the delta virus amid the price pressures fueled by commodities. Markets are also digesting the prospect of reduced central bank policy support.
Elsewhere, Bitcoin slipped for a third day in volatile trading, falling as much as 7.6% before rebounding above $ 43,000. Oil rebounded after two days of decline, while iron ore futures paused after Monday’s rout, although they remained below $ 100 a tonne on production restrictions of steel from China.
In Canada, Prime Minister Justin Trudeau won a third term in a snap election, but failed to regain a parliamentary majority. The national currency was among the best performers in the Group of 10 basket.
Here are the key events to watch this week:
- Bank of Japan rate decision Wednesday
- Federal Reserve rate decision on Wednesday
- Bank of England rate decision Thursday
- Fed Chairman Jerome Powell, Fed Governor Michelle Bowman and Vice President Richard Clarida discuss recovery from pandemic on Friday
For more market analysis, read our MLIV blog.
Some of the main movements in the markets:
- S&P 500 futures rose 0.7% at 8:31 am New York time
- Futures on the Nasdaq 100 rose 0.7%
- Futures contracts on the Dow Jones Industrial Average rose 0.7%
- The Stoxx Europe 600 is up 1%
- The MSCI World index rose 0.1%
- Bloomberg Dollar Spot Index fell 0.1%
- The euro rose 0.1% to $ 1.1740
- The British pound rose 0.2% to $ 1.3678
- The Japanese yen was little changed at 109.46 per dollar
- The yield on 10-year Treasuries rose 1 basis point to 1.32%
- German 10-year yield fell one basis point to -0.33%
- The UK 10-year yield was little changed at 0.79%
- West Texas Intermediate crude rose 0.9% to $ 70.90 a barrel
- Gold futures rose 0.4% to $ 1,771.10 an ounce
More stories like this are available at bloomberg.com
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