Europe shares fall, Wall St pauses as Evergrande fears hover; US yields rise
NEW YORK/LONDON : European equity markets fell on Friday and major U.S. indexes were little changed as worries over fallout from debt-laden China Evergrande persisted, while U.S. bond yields pushed higher after hawkish stances from central banks.
MSCI’s gauge of stocks across the globe shed 0.20per cent after three days of gains, leaving it little changed for the week.
Concern over whether distress at Evergrande could spill into the broader economy has hovered over markets this week. Evergrande’s electric car unit warned it faced an uncertain future unless it got a swift injection of cash, the clearest sign yet that the property developer’s liquidity crisis is worsening in other parts of its business.
“You look back on this week and there is a lot for global markets to digest,” said Matthew Miskin, co-chief investment strategist at John Hancock Investment Management.
“There is still not clarity on how China will address the cracks in their credit markets.”
On Wall Street, the Dow Jones Industrial Average fell 4.97 points, or 0.01per cent, to 34,759.85, the S&P 500 gained 1.89 points, or 0.04per cent, to 4,450.87 and the Nasdaq Composite dropped 22.91 points, or 0.15per cent, to 15,029.34.
Gains in S&P 500 cyclical sectors such as financials and energy countered declines for the tech and healthcare groups.
The pan-European STOXX 600 index lost 0.90per cent as weak German business confidence data also weighed.
“Some of the hesitancy in European markets could also be put down to the German elections, which promise to be the most interesting in some time,” said Chris Beauchamp, chief market analyst at IG.
Investors were also assessing a busy week of central bank meetings around the world, including arguably more hawkish stances from the U.S. Federal Reserve, as well as from policymakers in Britain and Norway.
Yields on benchmark U.S. 10-year Treasury notes hit their highest level since July 2. The notes fell 13/32 in price to yield 1.4526per cent, from 1.41per cent late on Thursday.
“A week of central bank action has shown us that policymakers are ready to move toward reining in on loose monetary policies introduced during the pandemic,” ING analysts wrote in a note to clients.
The dollar index rose 0.22per cent and was on track for a third straight week of gains, with the euro down 0.19per cent to US$1.1714. The Japanese yen weakened 0.39per cent versus the greenback at 110.75 per dollar.
Oil prices rose, with Brent up to a near three-year high, supported by global output disruptions and inventory draws.
U.S. crude rose 0.93per cent to US$73.98 per barrel and Brent was at US$77.97, up 0.93per cent on the day.
Spot gold added 0.5per cent to US$1,750.92 an ounce.
(Additional reporting by Anushka Trivedi, Sruthi Shankar and Shreyashi Sanyal in Bengaluru, Alun John in Hong Kong, Dhara Ranasinghe, Elizabeth Howcroft and Marc Jones in London; Editing by Robert Birsel, Chizu Nomiyama, Andrew Heavens and Dan Grebler)
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