Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Muted Jubilation As Evergrande Makes Debt Payment

By XM Group (Trading Point )Market OverviewOct 22, 2021 06:17AM ET
www.investing.com/analysis/muted-jubilation-as-evergrande-makes-debt-payment-200605972
Muted Jubilation As Evergrande Makes Debt Payment
By XM Group (Trading Point )   |  Oct 22, 2021 06:17AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
  • Relief as Evergrande averts default but China’s property woes not over
  • Stocks mostly up but gains are modest as tech weighs
  • Dollar hovers in recent range, eyes Powell speech for direction
  • Commodity dollars bounce back, flash PMIs support euro and pound


Evergrande interest payment calms nerves, slightly

Embattled property giant, Evergrande, has reportedly paid its overdue interest on dollar-denominated bonds amounting to $83.5 million following weeks of speculation about its finances. Markets were taken by surprise from the news as only a day ago it looked like the company was going to miss its coupon payment after the sale of some of its assets fell through.

However, whilst there is huge relief that Evergrande has dodged an imminent default, investors remain wary about the company’s future prospects as further interest payments on international bonds are due in November and December. Moreover, a number of other Chinese real estate developers, most notably Sinic Holdings, have already defaulted on some of their bond payments, hence, the subdued reaction in the markets today.

China’s blue-chip CSI 300 index closed up 0.6%, but the SSE (LON:SSE) Composite index slipped by 0.3%. There were no fireworks in Hong Kong either as the Hang Seng index was last trading 0.3% higher as Evergrande’s earlier rally sputtered out in late session.

Wall Street set for mixed open after S&P 500 record

While the focus in Asia remains on Evergrande and its next payment deadlines, the Q3 earnings season is keeping investors preoccupied on Wall Street. The S&P 500 closed at a new all-time high on Thursday, boosted by more upbeat earnings, with Tesla (NASDAQ:TSLA) being one of the big gainers after the company reported stronger-than-expected results.

However, futures were struggling on Friday after Snapchat owner, Snap Inc (NYSE:SNAP)., missed its revenue estimates, blaming Apple’s recent privacy policy changes for the hit to its digital advertising business.

Shares in Snap and other tech firms that rely on digital ads, such as Facebook (NASDAQ:FB), Alphabet (NASDAQ:GOOGL) and Twitter (NYSE:TWTR), plunged in after-hours trading yesterday and the Nasdaq Composite was last indicated to open 0.4% lower today.

However, Dow Jones futures fared slightly better, likely being buoyed by reports that the Democrats are inching closer to reaching a compromise between the party moderates and progressives on the size and scope of President Biden’s ambitious spending agenda. After months of wrangling, the proposed $3.5 trillion social spending bill looks set to be significantly watered down in order to get Senate approval where the Democrats have a razor-thin majority.

But hopes are high that both the hard and human infrastructure bills will be passed by Congress by the self-imposed deadline of October 31, and this could give the Dow Jones the edge in the coming days. However, even if the Nasdaq were to pare its weekly gains today, it will have plenty of chances to fight back next week as a slew of big tech earnings are on the way.

Dollar on the backfoot, hoping for a Powell boost

In the FX sphere, safe haven currencies were slightly under pressure from the improved risk tone, though the US dollar was able to draw support from firm Treasury yields. Ten-year Treasury yields briefly topped 1.70% on Thursday after US weekly jobless claims fell to a new post-pandemic low and existing home sales rose more than expected, reinforcing the view that the Fed will begin tapering its asset purchases next month.

Fed Chair Jerome Powell is due to participate in a panel discussion later today and yields could climb to fresh highs if he strikes a hawkish tone.

At the moment, though, the dollar is headed for weekly losses, with the commodity-linked currencies being the main winners. Expectations that surging inflation will compel central banks to tighten policy more aggressively than what has been messaged by policymakers has spurred the aussie, kiwi and loonie to multi-month highs versus the greenback.

An intervention by the Reserve Bank of Australia to cap the yield on three-year Australian government bonds – the first in eight months – doesn’t appear to have dented the aussie, which is rebounding strongly after yesterday’s dip.

Meanwhile, some encouraging flash PMI numbers out of the UK and Eurozone are propping up the pound and euro. A huge beat in the UK October PMIs is more than offsetting the surprise decline in September retail sales. The Eurozone PMIs were not quite as strong but still solid overall. However, growing bets that the European Central Bank could also be forced to bring forward its first rate hike are likely behind some of the euro’s gains.

Muted Jubilation As Evergrande Makes Debt Payment
 

Related Articles

Muted Jubilation As Evergrande Makes Debt Payment

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email