27 September 2021

European Stocks Slide Amid Evergrande Concerns


News shaping
the markets today


What’s happening: European stocks fell on Friday on continuing concerns surrounding property developer China Evergrande Group.

What happened: European stocks also came under pressure as investors booked profits after the mid-week spike in global equity markets.

Traders also digested policy decisions from the central banks of some countries and awaited federal elections of a major European country over the weekend.

Why it matters: The deadline for paying bond interest worth a whopping $83.5 million passed without any comment from China Evergrande Group. Investor concerns were fuelled by reports of authorities in China ordering local officials to prepare for the potential collapse of China’s property developer. In Hong Kong, shares of China Evergrande Group tumbled around 12% on Friday.

However, comments from ECB President Christine Lagarde provided some support to the European markets. Lagarde said in an interview that the collapse of China’s embattled firm would have a “limited” impact on Europe.

Meanwhile, the Bank of England kept its monetary policy unchanged during its latest policy meeting. However, the country’s central bank lowered its economic growth estimates for the third quarter. The bank’s announcement came a day after the US Federal Reserve announced plans to hold interest rates near zero but indicated a rollback of the stimulus that it has been providing to support the country’s economy amid the covid-19 pandemic.

On the economic data front, Germany’s business sentiment fell for the third straight month to 98.8 in September, according to IFO Institute. This was the weakest reading in five months. Investors were also gearing up for Germany’s federal elections over the weekend. According to early projections, the country’s Social Democrats narrowly won the national election, bringing an end to 16 years of office under Angela Merkel’s party. Germany’s DAX 30 index declined by 0.7% on Friday.

Shares of German companies Adidas and Puma fell after Nike lowered its sales forecast for fiscal 2022, citing supply chain disruptions.

The pan-European Stoxx 600 index declined by 0.9% to settle at 463.29 on Friday, ending a three-day rally, with majority sectors closing in the negative zone. The French 40 index lost 0.95%, while London’s FTSE 100 closed lower by 0.38%.

What to watch: Investors will continue to keep an eye on the results of Germany’s federal elections. Markets also await Eurozone data on loans to households, loans to non-financial corporations and M3 money supply. A speech from the ECB President, scheduled today, will also remain in focus.

The Markets Today


Bitcoin will be in focus today after recording losses during the previous week.

Context: Bitcoin prices remained under pressure last week due to ongoing uncertainty surrounding the China Evergrande Group crisis.

Details: Bitcoin had reached an all-time high of $64,895 on April 14 following comments from several influencers, including Tesla CEO Elon Musk. However, traders have booked profits over the last few days, adding other assets to their portfolios on continued optimism surrounding the global economic recovery.

Concerns remain, however, around a potential collapse of China Evergrande Group, with experts projecting the group to default on its payment. Against this backdrop, investors made calculated moves in the cryptocurrency market last week.

Bitcoin traded close to $42,250 on Sunday, with the digital currency tumbling more than 11% over the past week. The market capitalisation of the crypto king stood close to $795.22 billion on Sunday. Ethereum also traded lower to near $2,850 on Sunday, losing more than 16% over the last week.

What to watch: Traders will monitor developments around cryptocurrencies being adopted by countries after El Salvador declared Bitcoin as legal tender.

Other Markets: US indices closed slightly higher on Friday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.10%, 0.15% and 0.09%, respectively.

Support & Resistances
for Today


market snapshot


Futures at 0400 (GMT)

What else to watch today


Spain’s producer prices, France’s initial jobless claims and unemployed persons, Germany’s Bundesbank monthly report, Mexico’s balance of trade and overall index of economic activity, Brazil’s value of loans and Central Bank of Brazil’s focus market readout, America’s durable goods orders and Dallas Fed manufacturing index, as well as Argentina’s retail sales.


ADS Securities London Limited “ADSS” is an execution-only service provider. This material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or investment objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by ADSS that any particular investment, security, transaction or investment strategy is suitable for any specific person. To the extent that any content in this material is construed as investment research, you must note and accept that the content was not prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.  This material may contain links to third party websites, and any content, or use of your personal data by any third party websites is not the responsibility of ADSS or any member of the ADSS Group.