Equity markets mostly rose in Asia on Monday following a broadly positive lead from Wall Street, while investors kept a nervous eye on developments in the crisis at troubled Chinese property giant Evergrande as it teeters on the brink.
Hong Kong was among the best performers on bargain-buying after suffering a blow-out last week, though traders were still none the wiser about whether Evergrande paid interest on an offshore bond that was due last Thursday.
While concerns about an economically disastrous collapse of the firm have abated for now, analysts warned there was a long way to go before markets were out of the woods.
Reports at the weekend said Chinese authorities had ordered local housing chiefs to put the company’s cash in ringfenced accounts to make sure it is used to complete construction projects.
Observers said the move showed homeowners were taking priority for the government as it tries to temper social anger.
But Beijing has remained largely silent on the crisis, leaving many to guess its plans.
Hong Kong edged up but Evergrande’s electric-vehicle unit slumped by more than nine percent after it scrapped a proposed listing on the Shanghai Stock Exchange and warned it was running out of cash.
Sydney, Seoul, Singapore, Manila, Mumbai and Bangkok were all in positive territory, though Shanghai, Wellington and Jakarta dipped.
Tokyo was flat, days ahead of a leadership election in Japan’s ruling party to replace Prime Minister Yoshihide Suga, with optimism that the winner will push for a huge new stimulus package for the stuttering economy.
“Markets seem to be rapidly pricing in Evergrande as a fully controllable outcome that won’t spill over China’s borders into the wider financial universe,” said OANDA’s Jeffrey Halley.
But Shane Oliver, at AMP Capital, warned: “Global fears around contagion from Evergrande have receded a bit but it’s too early to sound the all-clear.
“Shares remain vulnerable to short-term volatility.”
The upbeat start to the week followed gains for the S&P 500 and Dow in New York, where dealers have taken in stride the Federal Reserve’s plan to start tapering its ultra-loose monetary policy.
But there is growing concern about US lawmakers’ failure to lift the debt limit to pay its bills, putting in danger of a default that several people, including Treasury Secretary Janet Yellen, warn would cause an economic catastrophe.
The row comes as Republicans dig in against Joe Biden’s multitrillion-dollar Build Back Better programme that would invest in climate change policy; lower childcare and education costs for working families; and create millions of jobs.
The euro edged down slightly against the dollar as a general election in Germany — Europe’s biggest economy — ended with both main parties battling to form a government, putting the country in a period of uncertainty and leaving the question of who will succeed Angela Merkel wide open.
The country’s DAX index rose more than one percent in early trade. London and Paris also started on the front foot.
Bitcoin was moving around $44,000, having largely recovered over the weekend from a plunge below $40,000 that came in reaction to news that China deemed all financial transactions involving cryptocurrencies illegal, sounding the death knell for the country’s digital trade.
Meanwhile, Brent oil prices jumped to around three-year highs just short of $80 a barrel, on concerns about tightening supplies as demand recovers owing to the reopening of economies from the pandemic.
Tokyo – Nikkei 225: FLAT at 30,240.06 (close)
Hong Kong – Hang Seng Index: UP 0.1 percent at 24,208.78 (close)
Shanghai – Composite: DOWN 0.8 percent at 3,582.83 (close)
London – FTSE 100: UP 0.5 percent at 7,088.24
Dollar/yen: DOWN at 110.70 yen from 110.73 yen at 2100 GMT on Friday
Euro/dollar: DOWN at $1.1700 from $1.1725
Pound/dollar: UP at $1.3686 from $1.3674
Euro/pound: DOWN at 85.50 pence from 85.64 pence
West Texas Intermediate: UP 1.0 percent at $74.75 per barrel
Brent North Sea crude: UP 1.1 percent at $78.92 per barrel
New York – Dow: UP 0.1 percent at 34,798.00 (close)
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