S&P 500 edges up, European shares slump amid Evergrande fears, US yields rise

The pan-European STOXX 600 index lost 0.90 per cent as weak German business confidence data also weighed. — Reuters pic

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NEW YORK/LONDON, Sept 25 — Wall Street’s S&P 500 posted a slim gain yesterday while major European markets slumped as investors weighed potential fallout from debt-laden China Evergrande and US bond yields pushed higher after hawkish stances from central banks.

MSCI’s gauge of stocks across the globe shed 0.15 per cent after three days of gains, leaving it little changed for the week.

Concern over whether distress at Evergrande could spill into the broader economy has hovered over markets this week. Evergrande’s electric car unit warned it faced an uncertain future unless it got a swift injection of cash, the clearest sign yet that the property developer’s liquidity crisis is worsening in other parts of its business.

“For foreign investors, (Evergrande) is still an evolving story,” said Anu Gaggar, global investment strategist with Commonwealth Financial Network. “There is a lot of uncertainty which will play out in the next month.”

On Wall Street, the Dow Jones Industrial Average rose 33.18 points, or 0.1 per cent, to 34,798, the S&P 500 gained 6.5 points, or 0.15 per cent, to 4,455.48 and the Nasdaq Composite dropped 4.55 points, or 0.03 per cent, to 15,047.70.

Nike Inc shares slumped 6.3 per cent after the sportswear maker cut its fiscal 2022 sales expectations.

The pan-European STOXX 600 index lost 0.90 per cent as weak German business confidence data also weighed.

“Some of the hesitancy in European markets could also be put down to the German elections, which promise to be the most interesting in some time,” said Chris Beauchamp, chief market analyst at IG.

Investors were also assessing a busy week of central bank meetings around the world, including arguably more hawkish stances from the US Federal Reserve, as well as from policymakers in Britain and Norway.

Yields on benchmark US 10-year Treasury notes hit their highest level since July 2. The notes fell 13/32 in price to yield 1.4543 per cent, from 1.41 per cent late on Thursday.

The yields are “breaking out a little bit” and investors are “almost sighing with relief that we are seeing higher rates and the world isn’t falling apart,” said Jack Ablin, chief investment officer at Cresset Capital Management.

The dollar index rose 0.186 per cent, with the euro down 0.14 per cent to US$1.172. The Japanese yen weakened 0.39 per cent versus the greenback at 110.75 per dollar.

Oil prices rose, with Brent up to a near three-year high, as global output disruptions have forced energy companies to pull large amounts of crude out of inventories.

US crude settled up 0.9 per cent at US$73.98 per barrel and Brent settled at US$78.09, up 1.1 per cent on the day.

Spot gold added 0.3 per cent to US$1,747.42 an ounce. — Reuters