Decline in futures contracts on European equities; China Evergrande worries more and more


By Peter Nurse – European stock markets are expected to open slightly lower on Monday, amid weakness in Asia and lingering concerns about the health of real estate giant China Evergrande Group.

At 2:05 am ET (0605 GMT), the DAX futures contract in Germany was trading down 0.8%, CAC 40 futures in France fell 0.3%, and the FTSE 100 futures contract in the United Kingdom. United fell 0.4%.

Sentiment in Europe was hit by weakness in Asia overnight, with the Hang Seng index in Hong Kong falling more than 2% and the Nikkei index in Japan falling more than 1%, while the indices on mainland China were closed.

The main driver of those losses was concerns about China’s real estate sector, as trading in debt-laden Evergrande shares was suspended after missing a key interest payment for the second time last week as it is working to refinance more than $ 300 billion in liabilities.

“Evergrande has a $ 260 million offshore note maturing today that only has a five-day ‘grace’ period, and if no sign of payment occurs, negative noise is surrounding it. ‘Chinese business and real estate market will increase again, “OANDA said. strategist Jeffrey Halley in a note to clients.

Reports circulated Monday that the struggling developer is selling half of its stake in its property management unit to Hopson Development for more than $ 5 billion. However, there was no clarity as to how the funds from any sale would be allocated.

In addition to the struggles in the Chinese real estate market and the country’s broader regulatory crackdown, investors are also worried about rising inflation and the obvious possibility that central banks will scale back their bond buying programs in the near future. to come up.

Data released on Friday showed Eurozone inflation hit a 13-year high last month, up 3.4% year-on-year, from 3.0% in August.

In corporate news, UK supermarket stocks will be in the spotlight. Private equity firm Clayton Dubilier & Rice won a long battle for Wm Morrison (LON: MRW) at an auction this weekend, although the winning bid was around 3% lower at the close from the Friday market. Shareholders will now vote on the deal later this month, with their approval leading to the company’s transformation into a private enterprise.

Also interesting on Monday will be a meeting of eurozone finance ministers to discuss issues such as the EU’s stimulus packages as well as the progress of the long-delayed banking union project.

Crude prices edged down on Monday before the last major producers’ meeting, which could lead to additional production in the world market.

The Organization of the Petroleum Exporting Countries and its Russian-led allies, a group known as OPEC +, meet later Monday and come under pressure from a number of countries, including the United States and the India, the world’s largest and third-largest consumers, respectively, produce more to lower prices.

The group has previously said it will increase production by 400,000 barrels per day each month until at least April 2022 to phase out 5.8 million barrels per day from existing cuts.

At 2:05 am ET, U.S. crude futures were trading down 0.4% to $ 75.61 per barrel, while the Brent contract was down 0.3% to $ 79.05.

Additionally, gold futures rose 0.2% to 1,762.35 / oz, while EUR / USD edged up to 1.1599.

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