Hang Seng sinks as China’s Evergrande drags property and banking stocks
World shares and U.S. futures fell Monday after Wall Street ended last week with another decline.
Many markets in Asia were closed for holidays and analysts said the thin trading accentuated volatility. Shares dropped more than 2% in Paris and Frankfurt, while Hong Kong’s HSI, +0.51% benchmark sank 3.3%.
Investors are watching to see whether the Federal Reserve will take any action to address the impact of rising prices on businesses and consumers.
Worries are mounting, also, about the U.S. debt ceiling. House Democrats said Friday they planned to move this week to suspend the cap on the government’s borrowing authority, and the White House ratcheted up pressure on Republicans by warning state and local governments that severe cuts lie ahead if the measure fails in the Senate.
Germany’s DAX dropped 2.1% to 25,163.25 and the CAC 40 in Paris shed 2.3% to 6,419.61. Britain’s FTSE 100 lost 1.4% to 6,866.39.
Heavyweight Hong Kong property companies and banks lost ground on persisting concerns over the potential for ripple effects from the financial troubles of Chinese developer Evergrande.
The company was expected to miss interest payments, as ratings companies forecast it may default on its debt. Its shares 3333, -0.44% fell 10.6% on Monday.
Henderson Land Development 12, +2.07% dropped 13% and New World Development lost 12% amid reports that China would tighten oversight over the property sector in Hong Kong.
The Hang Seng in Hong Kong dropped 821 points to 24,099.14. Australia’s S&P/ASX 200 shed 2% to 7,248.20. Markets were closed in mainland China, South Korea, Japan, Taiwan and Malaysia.
“Asia is off to a nervous start today with liquidity seriously thinned by holidays,” Jeffrey Halley of Oanda said in a commentary. “The list of circling sharks is long, starting with increasing noise from the U.S. about the debt ceiling.”
The Fed is due to deliver its latest economic and interest rate policy update on Wednesday. The central bank has said higher costs for raw materials and consumer goods are still likely to be temporary as the economy recovers, but analysts worry that higher prices could stick around and dent companies’ bottom lines while also crimping spending.
