European stocks rose with US equity futures as China moved to address a worsening property slump, shoring up confidence in global markets.
(Bloomberg) — European stocks rose with US equity futures as China moved to address a worsening property slump, shoring up confidence in global markets.
The Stoxx 600 and US futures flipped to gains on news that Chinese developer Country Garden Holdings Co. is seeking to extend a maturing bond for the first time. Country Gardens is soliciting some bondholders’ feedback on a proposal to extend payment of a yuan note due Sept. 2, people familiar with the matter said, asking not to be identified discussing a private matter.
Country Garden Seeks to Extend Maturing Bond in First for Firm
“It’s such a significant financial shock to the system that the authorities will do everything they can contain it,” Bell said Andrew Bell, chief executive officer at Witan Investment Trust. “I suspect the risk of contagion beyond China is pretty low. But it is another reason for markets to be a little bit cautious over the summer.”
Once China’s largest private-sector developer by sales, the company in the spotlight as the company is at risk of joining a slew of defaulters if it fails to make coupon payments on two dollar bonds within a 30-day grace period. Its shares dropped more than 19% in Hong Kong on Monday, after closing below HK$1 for the first time ever last week.
Adding to the jitters is news that one of China’s largest largest private wealth managers missed payments on investment products sold to the nation’s high-net worth clients and corporations, stoking fears more defaults may happen in such products.
Shares in mainland China declined while almost all of the 80 members of Hong Kong’s Hang Seng Index slipped Monday. The CSI 300 Index, which is the benchmark of onshore Chinese shares, is now close to erasing all of the gains it made after the Politburo meeting last month amid signs of deterioration in the economy.
Treasury yields remained elevated near levels last seen in November on speculation the Federal Reserve will keep interest rates in restrictive territory and disappoint investors hoping for easier policy. Focus later this week will be on minutes of Fed’s latest policy meeting as traders seek clues on the central bank’s next move.
“Equity markets have had quite a strong rally over the last two or three months on hopes that we’re about to see the peak in interest rates,” Bell said. “The market was traveling a little bit on fumes, and now we have to live through the good news before before you can jump another step higher.”
Key events this week:
- China medium-term lending, retail sales, industrial production, fixed-asset investment, FX net settlement, Tuesday
- Japan industrial production, GDP, Tuesday
- UK jobless claims, unemployment, Tuesday
- US retail sales, empire manufacturing, business inventories, cross-border investment, Tuesday
- Reserve Bank of Australia policy minutes, Tuesday
- Federal Reserve Bank of Minneapolis President Neel Kashkari speaks, Tuesday
- China property prices, Wednesday
- Eurozone industrial production, GDP, Wednesday
- UK CPI, Wednesday
- US FOMC minutes, housing starts, industrial production, Wednesday
- US initial jobless claims, US Conf. Board leading index, Thursday
- Eurozone CPI, Friday
Some of the main moves in markets:
Stocks
- The Stoxx Europe 600 rose 0.1% as of 9:21 a.m. London time
- S&P 500 futures rose 0.2%
- Nasdaq 100 futures rose 0.4%
- Futures on the Dow Jones Industrial Average rose 0.2%
- The MSCI Asia Pacific Index fell 1.2%
- The MSCI Emerging Markets Index fell 0.9%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro was little changed at $1.0955
- The Japanese yen was little changed at 144.84 per dollar
- The offshore yuan fell 0.1% to 7.2682 per dollar
- The British pound was little changed at $1.2692
Cryptocurrencies
- Bitcoin was little changed at $29,423.85
- Ether fell 0.2% to $1,849.15
Bonds
- The yield on 10-year Treasuries was little changed at 4.16%
- Germany’s 10-year yield was little changed at 2.62%
- Britain’s 10-year yield was little changed at 4.52%
Commodities
- Brent crude fell 0.3% to $86.58 a barrel
- Spot gold was little changed
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Michael Msika and Tassia Sipahutar.
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