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Markets Tumble on Evergrande Jitters; Energy Crisis Eases - What's Moving Markets

EconomySep 20, 2021 06:35AM ET
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© Reuters.

By Geoffrey Smith 

Investing.com -- Global stock markets tumble and the dollar rises ahead of a likely default by one of China's biggest real estate developers. Wall Street is set to open sharply lower at the open as a consequence. Europe's energy crisis shows signs of easing, but fertilizer plants are still being hit by high gas prices, and Tesla (NASDAQ:TSLA) gets a dressing-down from the new head of the NTSB. Here's what you need to know in financial markets on Monday, 20th September.

1. Global markets tumble on Evergrande jitters

Global stock markets tumbled as nerves frayed ahead of a number of big risk events later in the week, including the Federal Reserve’s policy decisions on Wednesday.

The action was concentrated in Hong Kong, the only open market in China, where the Hang Seng index fell 3.3% on fears that the likely default of real estate developer China Evergrande (OTC:EGRNY) on Thursday would trigger broader distress in the financial and real estate sectors. Three of the index’s biggest developers, Henderson Land (OTC:HLDCY), New World Development  (OTC:NDVLY) and Sun Hung Kai Properties (HK:0016), all fell more than 10%.

The move, along with Friday’s weak close on Wall Street, also pushed European benchmark indices down by between 1.5% and 2.2%. In commodities markets, Iron ore Futures tumbled again due to the read-across for steel demand from the property and financial sectors.

2. Europe energy crisis eases

Europe’s energy crisis showed signs of easing but still risks getting worse before its gets conclusively better.

U.K. power prices receded from last week’s highs on the increased availability of wind power. However, the U.K. government is holding crisis talks with the energy industry ahead of a wave of likely bankruptcies to smaller suppliers, which will threaten deliveries to their final customers.  Norwegian oil and gas giant Equinor (NYSE:EQNR) also received permission from regulators to increase exports to the EU from its Troll and Oseberg fields.

Lower demand from U.K. power generators is also taking the edge off EU gas futures, although signs of stress in the system continue: Fertiberia, Spain’s largest ammonia producer, will delay the reopening of two plants after scheduled maintenance while gas prices remain so high. Norway’s Yara (OTC:YARIY), meanwhile, said it will cut its European ammonia production 40%.

3. Stocks set to open lower, streamers vs legacy channels in focus after Emmys

U.S. stocks are set to open sharply lower later, as Chinese and central bank risks prompt investors to take money off the table after a strong year-to-date.

By 6:15 AM ET (1015 GMT), Dow Jones futures were down 547 points, or 1.6%, while S&P 500 futures were down 1.4% and Nasdaq 100 futures were down 1.0%.

Additional risks lurking include the suspension of federal government agencies due to the ongoing dispute over the debt ceiling, although analysts note that this argument remains – as usual – largely in the realm of political theater.

Stocks likely to be in focus later include Netflix (NASDAQ:NFLX), AT&T (NYSE:T) and Walt Disney (NYSE:DIS), after the first of those three trounced the other two at this year’s Emmy Awards.

4. NTSB gives Tesla a dressing-down

Tesla (NASDAQ:TSLA) stock is likely to be in the spotlight after the new head of the National Transportation Safety Board criticised the company’s rollout of driver-assistance software in an interview with The Wall Street Journal.

“Basic safety issues have to be addressed before they’re then expanding it to other city streets and other areas,” Jennifer Homendy told the WSJ, days after Tesla CEO Elon Musk told customers that they will soon be able to request an enhanced version of the ambitiously-named “Full Self Driving” software suite, which aims to help drivers in cities.

A host of recent YouTube videos have illustrated the mixed performance of the software's Beta version in urban settings, which required frequent human driving interventions.

5. Oil tumbles on economy fears, higher output

Crude oil prices tumbled as fears for the global economy coupled with the steady restoration of production in the Gulf of Mexico and signs of increased production in the mainland U.S. to release some of the tightness in the world market.

By 6:25 AM ET, U.S. crude futures were down 2.2% at $70.25 a barrel, while Brent futures were down 1.8% a barrel.

On Friday, Baker Hughes’ rig count had shown a total of 512 active rigs in the week to Sep. 17, the  highest since April 2020 and double the level from the same time in 2020. At the same time, less than 500,000 barrels a day of output is now missing in the Gulf, with 77% of production back online.

Markets Tumble on Evergrande Jitters; Energy Crisis Eases - What's Moving Markets
 

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Comments (11)
David David
David9 Sep 20, 2021 9:39AM ET
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That's why I told you guys... when the China Lion roar, the whole market tumbles down.
taylor jason
taylor jason Sep 20, 2021 9:39AM ET
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more like fear of contagion
Jack Zydron
Jack Zydron Sep 20, 2021 9:15AM ET
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because of the developer. what a cirrus!!!!!! going strong it has nothing to do with the rest of the market
taylor jason
taylor jason Sep 20, 2021 9:15AM ET
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you couldn't be more wrong. this is the equivalent of Lehman brothers collapsing in China. Everglades has 300 billion in debt outstanding. who do you think is going to absorb that loss? if that loss is passed down to the financing banks that could create a liquidity crisis which could easily escalate to an insolvency crisis.
taylor jason
taylor jason Sep 20, 2021 9:15AM ET
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evergrande**
John Hat
John Hat Sep 20, 2021 8:46AM ET
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China is on its way out. A complete flop in History.
Jeff Chevalier
Jeff Chevalier Sep 20, 2021 8:46AM ET
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And the US? Lehmann, real estate fiasco, DOT come bubble?
Franco Dominguez
Franco Dominguez Sep 20, 2021 8:34AM ET
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FED elder still taking a nap WEAK UP, 🇺🇸🇺🇸🇺🇸is going to trash
Nayan Vyas
Nayan Vyas Sep 20, 2021 8:34AM ET
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it should give a bounce tommorow
Nayan Vyas
Nayan Vyas Sep 20, 2021 8:33AM ET
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I had mentioned 33600 on Dow last week Thursday
Nordin Mohamad
Nordin Mohamad Sep 20, 2021 8:33AM ET
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so what will happen after that...??
Jerome NY
Jeff_Musk Sep 20, 2021 8:22AM ET
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Dow fell below 120day line. NQ will follow Do not BTFD at this point
Jerome NY
Jeff_Musk Sep 20, 2021 8:20AM ET
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Fed should have stopped pumping money form Q4 last year so that these crazy rise never happened. Dow 30k NQ100 12k should’ve reached the end of this year
Ronald Warren
Ronald Warren Sep 20, 2021 8:14AM ET
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The Chinese government has been bailing out builders for years. Buying up apartments they couldn't sell. Unlike the U.S. government, they are trying to manage their debt. They're not gonna bite off this one!
Butch Einsel
Butch Einsel Sep 20, 2021 8:14AM ET
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so your thinking they let Evergrand go under?
IceIce Baby
IceIceBaby Sep 20, 2021 7:08AM ET
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Do really people care about Evergrande in EU markets? I doubt. Nor in US markets. I think Evergrande is just an another excuse to push markets lower.
Jack Hoodie
Jack Hoodie Sep 20, 2021 7:08AM ET
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the markets can't always go up, this is not the 20s
IceIce Baby
IceIceBaby Sep 20, 2021 7:08AM ET
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Jack Hoodie  20s? Like 1929? :D
Monkey Singh
Monkey Singh Sep 20, 2021 6:38AM ET
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Hopefully all markets should start hitting LCs everyday and these fraud prop desks that deliberately keep indices up without any reason should all be doomed.
 
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