European markets took their cue from Asia on Thursday, tumbling into the red after shares in China’s Evergrande (3333.HK) tanked as they resumed trading.
Stocks with Chinese exposure, most notably the mining sector, were hit the most as China is the world’s biggest consumer of many metals and minerals.
Following a 17-day suspension, the property development company nosedived as much as 14% on the day. It revealed that a $2.6bn (£1.88bn) deal from real estate firm Hopson Development was off the table as they were unable to agree on terms.
Hopson was set to buy a 51% stake in its property services unit.
Evergrande is currently plagued with more than $300bn worth of debt, worrying investors that it could go under. The company’s total liabilities are equal to around 2% of China’s gross domestic product (GDP).
It is now exploring other options available to protect its interest.
Watch: China Evergrande misses 3rd round of bond payments
On Wednesday, the Dow posted a new record intraday high, and the S&P 500 came within touching distance of doing the same, logging its sixth consecutive day of gains thanks to strong earnings reports
“This US exuberance isn’t translating into today’s European open… after markets in Asia came under pressure, with Evergrande shares once again getting clobbered as trading restarts there, while concerns about rising COVID cases as winter approaches is again taking its toll,” Michael Hewson of CMC Markets said.
Traders will be keeping their eye on US jobs data again later today. Last week, US weekly jobless claims came in at a new post-pandemic low of 297,000. Continuing claims have also continued to decline, as they come within touching distance of the 2.5 million level.
Expectations are for another decline to 293,000, with continuing claims expected to fall to 2.55 million.
Stocks in Asia mostly slumped overnight despite the strong Wall Street lead. In Japan, the Nikkei (^N225) fell 1.9% while the Hang Seng (^HSI) lost 0.8%, swinging in and out of positive territory throughout the session.
However, the Shanghai Composite (000001.SS) did manage to eke out a 0.2% gain.
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