FINANCE

Global stock bounce after Evergrand bond payment update


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Wall Street and European stock markets bounced on Wednesday after Wall-hit Chinese property developer Evergrande said it had struck a deal to pay off a domestic debt, averting fears of a credit crunch in the world’s second-largest economy.

The S&P 500 added 1 percent, keeping Wall Street’s blue-chip stock index on track for its best trading day in two months. The technology-heavy Nasdaq composite rose 0.8 percent.

The move comes after a global equity shake-out on Monday, when S&P fell 1.7 percent since May amid fears of an evergreen.

Europe’s stocks 600 index rose 1 percent and the UK’s FTSE 100 rose 1.5 percent, lifted by shares of mining and commodities whose fortunes are in China.

Evergrande, which has a financial obligation of more than ০০ 200 billion and has been hit by government restrictions on lending to China’s vast real estate sector, said the issue of payment to domestic bondholders was “resolved” on Thursday.

The developer did not say how it would meet its onshore bond payments. But the statement reassured investors who hoped Beijing policymakers would try to limit potential losses by mainland Chinese donors, suppliers and homeowners.

“Perhaps we will see government intervention that gives some relief to domestic creditors,” said Francesco Sandrini, a senior multi-asset strategist at Amundi, Europe’s largest fund manager. “The Chinese authorities will do their best to control any spillover.”

Evergrand also has interest payments on a bond to foreign investors on Thursday.

“The Chinese authorities have a clear purpose and the necessary means to deal with any threat of a systemic crisis in the country’s internal financial system,” said Udit Sikand of the laboratory Gavekal.

“What happens to international investors is another matter.”

Sunil Krishnan, head of the Multi-Asset Fund for Aviva Investors, warned that while Beijing should “try and control” Evergrand’s problems, investors should fear that “it could have a cooling effect on real estate development activities and some impact on property prices.” Slow down China’s slowing economy.

Mainland Chinese stocks fell on Wednesday after markets reopened after a two-day national holiday, although investors were less than apprehensive as investors saw Evergrand avoid a disruptive fall as it promised to repay bonds onsour funds. China’s CSI 300 stock index fell 0.7 percent.

Yields on the 10-year Treasury note were down 0.01 percentage points at 1.314 percent, indicating cautious trading before the end of the Federal Reserve’s monthly meeting.

The Fed will update its economic forecasts and policymakers’ estimates later Wednesday when the US Federal Reserve raises interest rates following the first epidemic.

Investors are awaiting news on when the Fed could cut মাস 120 billion in its monthly bond purchases, which has increased nding and spending across the Kovid-1 pandemic epidemic.

While consumer price inflation in the United States has been above 5 percent for three consecutive months, Fed Chairman Jay Powell and other policymakers have called for a recovery in the labor market.

Sophie Chardon, a cross-asset strategist at Lombard Odier, said the Fed meeting was “likely to be a risky event” because it comes at a time when the market is digesting these concerns about China. Chardon said he hoped the U.S. Federal Reserve would lower its growth forecast and raise its inflation expectations even higher.

The dollar index, which measures the greenback against six currencies, was flat as currency traders refrained from making bets. The euro was stable against the dollar, buying 1.1731.



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