Global Stock Markets are Nervous about Evergrande

Highlights:

• • USA
    The Dow Jones advanced by 1.43% or 482.54 points, to 34,326.46. Meanwhile, the S&P 500 gained 1.15% or 49.50 points, to 4,357.04. The Nasdaq rose by 0.82% or 118.12 points, to 14,566.70.
  • ASIA
    The Nikkei dropped by 1.13% or 326.18, to 28,444.89.
    The Kospi is closed due to the holiday.
    Hang Seng closed with a drop of 2.19% or 539.27, to 24,036.37.
  • EUROPE
    The EuroStoxx 50 index declined by 0.48%, the FTSEurofirst 300 fell by 0.52%, and the Stoxx 600 lost 0.22%.

Wall Street stocks ended a challenging week in the green

The New York Stock Exchange settled in the positive territory on Friday, due to the news of the positive arrival of an anti Covid-19 pill. It outweighed fears of inflation and crisis in the United States Congress. 

The Dow Jones advanced by 1.43% or 482.54 points, to 34,326.46. Meanwhile, the S&P 500 gained 1.15% or 49.50 points, reaching 4,357.04. The Nasdaq rose by 0.82% or 118.12 points, to 14,566.70.

September, a traditionally bad month for Wall Street ended a positive streak that has lasted more than half a year. Investors regained confidence, and the market gained strength at the end of the session.

Several companies ended with substantial gains. Disney climbed by 4.07%, American Express added 3.87%, Visa increased by 3.44%,  and IBM gained 3.17%. 

Only four companies closed in the red. Walmart was the worst performer, dropping by 1.37%. 

Except for utilities, all sectors on Wall Street ended the session in the green. The energy sector was the biggest winner rising by more than 3% after a good day for oil prices. 

The cruise and air transport shares surged

Pharmaceutical company MSD stated that its oral treatment against the coronavirus reduces the risk of hospitalization or death among infected by around 50%. 

Following the news, shares of the company closed with a rise of more than 8% and supported gains among the thirty values of the Dow Jones. It also boosted the shares of companies linked to the economic recovery, such as airlines or cruise firms. 

Among the cruise sector companies, Norwegian Cruise Line surged by 5.93%. Carnival Corporation expanded by 4.32%, and Royal Caribbean increased by 3.80%.

As for air transport, United Airlines rose by 7.86%. Meanwhile, American Airlines gained 5.51%, and Delta Air Lines added 6.50%.

One of the manufacturer’s of vaccines against the coronavirus, Moderna’s laboratory, suffered a dip of 11.37%. 

The Nikkei fell sharply for six days in a row

The Nikkei average fell sharply for six days in a row, reaching the lowest price in a month. This investor sentiment worsened in the market due to the suspension of trading of Chinese Evergrande Group stocks in the Hong Kong market.

The Nikkei dropped by 1.13% or 326.18, to 28,444.89. 

When categorizing each industry, the shipping industry, electrical equipment, and glass and stone products posted the highest rates of decline. On the other hand, the air transportation industry, land transportation industry, and other financial industries had the highest rates of increase. 

Shipping stocks, such as NYK Line, Mitsui O.S.K. Lines and Kawasaki Ship fell sharply between 7-8%. High-tech stocks with high values ​​such as Lasertec, Murata, and Tokyo Electron also dropped significantly. 

Meanwhile, air transportation stocks such as JAL and land transportation stocks such as JR Central have performed strong. OLC increased by 4%, and Matsuki Yokokoka, which announced its earnings forecast for the current fiscal year due to the business merger, has grown rapidly.

 In addition, the family HD has been one of the best performers of the day. The company announced the establishment of a new shareholder benefit program.

 

The Kospi is closed due to the holiday

The South Korea Stock Exchange holiday is observing National Day today. This is a national holiday, so the stock market is closed. 

Korea Exchange, a securities exchange operator in South Korea, stated that the performance of large-cap stocks and small-cap stocks differed sharply. Small-cap stocks have outperformed large-cap stocks in the domestic stock market this year.

During this period, large-cap stocks rose only 1.61%. Meanwhile, mid-cap and small-cap stocks rose 17.74% and 22.70%, respectively. 

 

Hang Seng fell on Evergrande news

 

Hang Seng closed with a drop of 2.19% or 539.27, to 24,036.37. Investors kept monitoring the situation surrounding the debt concerns of Evergrande. The company missed two bond interest payments in the previous weeks. The market was affected by temporary suspension of trading by the Evergrande group. 

The Hang Seng China Enterprises lost 2,37%. 

 

The four sub-indices of the Hang Seng closed in the red. The trade and industry sector was the biggest loser, dropping by 2.87%.

 

The Financial sector shed 1.72%, Services slipped by 0.98%, and Real Estate shed 0.18%.

New World Development, the Hong-Kong based department store company, increased by 2.35%. 

In contrast, Hang Lung Properties lost 0.9%, and Link Reit dipped by 1.49%.

Energy companies closed mixed. CNOOC added 0.46%, and Sinopec lost 0.77%. Meanwhile, Petrochina closed unchanged.

 

Chinese technology companies suffered from losses. Alibaba plunged by 3.65%, and Xiaomi shed 3.74%. Losses of Tencent were somewhat more moderate, 0.95%.

Meanwhile, in the financial sector, insurers had a negative trading day. Ping An slid by 3.75%, and AIA declined by 1.94%.

 

The worst performers of the day were the pharmaceutical company Wuxi Bio, sliding by 8.61%, and Xinyi Glass, with a slump of 8.15%.

The business volume of the session was 113,290 million Hong Kong dollars.

 

Trading in Evergrande shares has been suspended

Evergrande declared today that it suspended trading on the Hong Kong Stock Exchange without giving any details on the matter. 

 

The group reported that the suspension affects all products related to the company. 

Evergrande shares rose by 15% last Wednesday after announcing the sale of its shares in a bank to a state company. 

 

Since the beginning of the year, the group’s parent company has lost 78.3%. At the end of June, the total liabilities of Evergrande exceeded 300,000 million dollars. It has to compensate 37,000 million in loans before the end of the first half of 2022. What happens with the company when the future still remains in the realm of speculation.

 

European stock markets are mostly negative

Main European stock markets started with losses today. Investors are closely following developments around Evergrande. 

The EuroStoxx 50 index declined by 0.48%, the FTSEurofirst 300 fell by 0.52%, and the Stoxx 600 lost 0.22%. The European technology sector traded with a loss of 1% after having fallen sharply last week due to rising bond yields. 

On the other hand, the transport sector continues to benefit from the announcement by the pharmaceutical group Merck & Co.

ADP gained 2.84%, Air France-KLM advanced by 1.92%, Ryanair climbed by 2.6%, and IAG added 2.18%.