European stocks open in the red
By James Hester
08:01, 20 September 2021
European stock markets opened sharply lower in early trading on Monday morning following big overnight falls for Asian equities. London’s FTSE 100 and Germany’s DAX were down around 1.2% and 1.9% respectively.
In Hong Kong trading, the Hang Seng ended 3.3% lower, with property stocks coming under pressure from continuing worries over the finances of Evergrande, China’s second largest developer by sales.
Evergrande woes
Troubled Evergrande owes $300bn and there are concerns it could default on its offshore bonds this Thursday as a key payment deadline looms. The property developer warned it was at risk of default last month when it issued a profits warning.
Hong Kong-listed Evergrande has lost about 85% of its value since the beginning of the year, with the shares falling another 12% on Monday.
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Risk aversion
A general rise in risk aversion was evident across the London market on Monday. Along with equities, commodities traded lower, with crude oil down 0.9% and the pound nearly 0.5% softer versus the dollar.
US Treasury bonds, meanwhile, were benefiting from the risk-off tone across markets, with 10-year US Treasuries gaining about 2.8%.
London-listed miner Anglo American was among the biggest fallers in the FTSE 100 as it came under pressure from lower platinum prices. Anglo shares fell 6.5% to £24.25.
Tide turning for bulls
Michael Brown, senior market analyst at Caxton, said the tide may be turning for equity bulls, with the S&P 500 having closed last week right on the weekly low, and below its 50-day moving average for the first time since June.
“Such has been the importance of this level in maintaining the market’s upwards momentum, bulls should be highly concerned that we now trade beneath the all-important medium-term momentum indicator,” added Brown.
Read more: Australian shares see worst day in near seven months
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