Global shares mix as investors focus on China property concerns

After a turbulent day in Asia, global shares were mixed Monday. However, European benchmarks and U.S. Futures were higher.

Global shares mix as investors focus on China property concerns

France's CAC40 gained 1.4% in early trading, to 6,546.97. Germany's DAX rose 1.5%, to 15,357.83. The FTSE 100 in Britain climbed 1.0% to 6,975.51. The future of the Dow industrials gained 1.1% to 34.211.00, and U.S shares saw gains. The future of the S&P 500 rose 1.0% to 4,392.75.

The Hang Seng in Hong Kong recovered earlier losses and gained 0.5% to 24,221.54. Tokyo's Nikkei 225 dropped 2.2% to finish at 29,839.71. The S&P ASX 200 in Australia gained 0.4%, to 7,273.80.

Evergrande, a Chinese real estate developer heavily indebted, is causing concern.

Analysts believe that fears of a property bust occurring in China could have global consequences. They are drawing from past financial crises, such as the 2008 subprime mortgage crisis or the burst of the Japanese bubble economy.

Japan's Lehman crisis refers to the 2008 collapse at Lehman Brothers, which further aggravated the situation.

RaboResearch stated that "the whisper is that China's Lehman moment' could be here."

China's second-largest economy is driven by property companies.

Investors who own their bonds could take losses if they default on their debts. This would raise concerns about their financial stability. These bondholders may also have to sell unrelated investments in order to raise cash. This could impact prices in markets that seem unrelated.

It is a result of how connected global markets are, and it is a concept that the financial world refers to as "contagion".

Many analysts believe that China's government will prevent this scenario. This does not seem like a Lehman moment. Wall Street may still be rattled by any hint of uncertainty after the S&P 500 has risen almost continuously since October. This leaves stocks looking more expensive and gives them less room to make mistakes.

Investors are also watching to see if Federal Reserve will ease off its support for the economy. Heavy government spending to combat the effects of the pandemic has increased the possibility that Congress will play a destructive game before allowing U.S. Treasury more money to borrow.

On Wednesday, the Fed will release its latest economic-interest rate policy update.

The benchmark U.S. crude oil rose $1.04 to $71.33 per barrel in energy trading. Brent crude, an international standard, rose $1.21 to $75.13 per barrel.

The U.S. dollar rose from 109.39 to 109.62 yen in currency trading. From $1.1726, the euro costs $1.1734.

You need to login to comment.

Please register or login.

RELATED NEWS