Global Shares Dip on China; US Shutdown09/26 05:14
Global shares mostly sank Tuesday over worries about a possible U.S.
government shutdown and the troubled Chinese economy.
TOKYO (AP) -- Global shares mostly sank Tuesday over worries about a
possible U.S. government shutdown and the troubled Chinese economy.
France's CAC 40 lost 0.7% in early trading to 7,076.82. Germany's DAX fell
0.5% to 15,329.25. Britain's FTSE 100 edged up 0.2% to 7,638.01. U.S. shares
were set to drift lower with Dow futures down 0.3% at 34,158.00. S&P 500
futures lost 0.5% to 4,359.25.
Japan's benchmark Nikkei 225 index slipped 1.1% to finish at 32,315.05.
Australia's S&P/ASX 200 dipped 0.5% to 7,038.20. South Korea's Kospi dropped
1.3% to 2,462.97. Hong Kong's Hang Seng shed 1.5% to 17,470.31, while the
Shanghai Composite fell 0.4% to 3,102.27.
Investors are watching for Chinese economic indicators being released later
in the week.
"The Chinese property woes are far from over, as the notorious developer
Evergrande defaulted on its 4 billion yuan onshore bond repayment and delayed
the restructuring meetings," said Tina Teng, market analyst at CMC Markets APAC
While the crisis is not shocking to those closely following China's property
market, concerns are growing that Chia's housing sector is still deteriorating,
raising risks of financial instability, said Stephen Innes, managing partner at
SPI Asset Management.
"It's important to acknowledge that tackling the housing issue is much more
challenging in practice than in theory. This difficulty is why property
developers are still struggling two years into the Evergrande debt crisis, and
potential homebuyers are hesitant to enter the market," he added.
Realization is also sinking in that the Federal Reserve will likely keep
interest rates high well into next year. The Fed is trying to ensure high
inflation gets back down to its target, and it said last week it will likely
cut interest rates in 2024 by less than earlier expected. Its main interest
rate is at its highest level since 2001.
The growing understanding that rates will stay higher for longer has pushed
yields in the bond market up to their highest levels in more than a decade.
That in turn makes investors less willing to pay high prices for all kinds of
investments, particularly those seen as the most expensive or making their
owners wait the longest for big growth.
In the near term, the U.S. government may be set for another shutdown amid
more political squabbles on Capitol Hill. But Wall Street has managed its way
through previous shutdowns, and "history shows that past ones haven't had much
of an impact on the market," according to Chris Larkin, managing director of
trading and investing at E-Trade from Morgan Stanley.
In energy trading, benchmark U.S. crude slipped $1.09 to $88.59 a barrel.
Brent crude, the international standard, fell $1.07 to $92.22 a barrel.
In currency trading, the U.S. dollar rose to 148.93 Japanese yen from 148.84
yen. The euro cost $1.0598, up from $1.0594.