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TOKYO: Global equities fell largely on Tuesday due to concerns about a possible U.S. government shutdown and unrest Chinese economy.
France’s CAC 40 lost 0.7% to 7,076.82 in early trading. The German DAX fell 0.5% to 15,329.25. Britain’s FTSE 100 rose 0.2% to 7,638.01. US stocks were expected to fall further, with Dow futures down 0.3% to 34,158.00. S&P 500 futures lost 0.5% to 4,359.25.
Japan’s benchmark Nikkei 225 index fell 1.1% to end at 32,315.05. Australia’s S&P/ASX 200 fell 0.5% to 7,038.20. South Korea’s Kospi fell 1.3% to 2,462.97. Hong Kong’s Hang Seng lost 1.5% to 17,470.31, while the Shanghai Composite fell by 0.4% to 3,102.27.
Investors are looking forward to the release of Chinese economic indicators later this week.
“China’s real estate woes are far from over as notorious developer Evergrande has defaulted on its 4 billion yuan onshore bond repayment and postponed restructuring meetings,” said Tina Teng, market analyst at CMC Markets APAC & Canada.
While the crisis is not shocking to those closely following China’s real estate market, there are growing concerns that Chia’s housing sector is still deteriorating, raising the risk of financial instability, said Stephen Innes, managing partner at SPI Asset Management.
“It is important to recognize that tackling the housing problem is much more challenging in practice than in theory. This difficulty is why developers are still struggling two years after the debt crisis in Evergrande, and potential homebuyers are hesitant to enter the market,” he added.
There is also a realization that the Federal Reserve will likely keep interest rates high well into next year. The Fed is trying to ensure that high inflation returns to its target level, and said last week that it will likely cut rates less in 2024 than previously expected. The key interest rate is at its highest level since 2001.
The growing perception that interest rates will remain higher for longer has pushed bond market yields to their highest levels in more than a decade. That, in turn, makes investors less willing to pay high prices for all kinds of investments, especially those that are considered the most expensive or that take their owners the longest to see big growth.
In the short term, the US government could face another shutdown amid more political wrangling on Capitol Hill. But Wall Street has navigated its way through previous shutdowns, and “history shows that previous shutdowns have not had much impact on the market,” said Chris Larkin, managing director of trading and investing at Morgan Stanley’s E-Trade.
In energy trading, benchmark U.S. crude fell $1.09 to $88.59 per barrel. Brent crude, the international standard, fell $1.07 to $92.22 per barrel.
In currency trading, the US dollar rose from 148.84 yen to 148.93 Japanese yen. The euro cost $1.0598, compared to $1.0594.
France’s CAC 40 lost 0.7% to 7,076.82 in early trading. The German DAX fell 0.5% to 15,329.25. Britain’s FTSE 100 rose 0.2% to 7,638.01. US stocks were expected to fall further, with Dow futures down 0.3% to 34,158.00. S&P 500 futures lost 0.5% to 4,359.25.
Japan’s benchmark Nikkei 225 index fell 1.1% to end at 32,315.05. Australia’s S&P/ASX 200 fell 0.5% to 7,038.20. South Korea’s Kospi fell 1.3% to 2,462.97. Hong Kong’s Hang Seng lost 1.5% to 17,470.31, while the Shanghai Composite fell by 0.4% to 3,102.27.
Investors are looking forward to the release of Chinese economic indicators later this week.
“China’s real estate woes are far from over as notorious developer Evergrande has defaulted on its 4 billion yuan onshore bond repayment and postponed restructuring meetings,” said Tina Teng, market analyst at CMC Markets APAC & Canada.
While the crisis is not shocking to those closely following China’s real estate market, there are growing concerns that Chia’s housing sector is still deteriorating, raising the risk of financial instability, said Stephen Innes, managing partner at SPI Asset Management.
“It is important to recognize that tackling the housing problem is much more challenging in practice than in theory. This difficulty is why developers are still struggling two years after the debt crisis in Evergrande, and potential homebuyers are hesitant to enter the market,” he added.
There is also a realization that the Federal Reserve will likely keep interest rates high well into next year. The Fed is trying to ensure that high inflation returns to its target level, and said last week that it will likely cut rates less in 2024 than previously expected. The key interest rate is at its highest level since 2001.
The growing perception that interest rates will remain higher for longer has pushed bond market yields to their highest levels in more than a decade. That, in turn, makes investors less willing to pay high prices for all kinds of investments, especially those that are considered the most expensive or that take their owners the longest to see big growth.
In the short term, the US government could face another shutdown amid more political wrangling on Capitol Hill. But Wall Street has navigated its way through previous shutdowns, and “history shows that previous shutdowns have not had much impact on the market,” said Chris Larkin, managing director of trading and investing at Morgan Stanley’s E-Trade.
In energy trading, benchmark U.S. crude fell $1.09 to $88.59 per barrel. Brent crude, the international standard, fell $1.07 to $92.22 per barrel.
In currency trading, the US dollar rose from 148.84 yen to 148.93 Japanese yen. The euro cost $1.0598, compared to $1.0594.
