The crisis at Evergrande, one of China's biggest developers, added to an already downbeat mood on trading floors
London (AFP) - US and European equities rebounded on Tuesday after fears over the possible collapse of Chinese property giant Evergrande sparked a rout across global markets.
London stocks closed 1.0 percent higher, while Frankfurt added 1.2 and Paris 1.3 percent.
On Wall Street, the Dow Jones Industrial Average climbed 0.4 percent in morning trades, while the tech-heavy Nasdaq gained around 0.7 percent.
Major European markets had fallen by around one or two percent on Monday, similar to drops seen across the Atlantic.
But concerns that a collapse of Evergrande could send shockwaves through the global financial system appeared to have ebbed.
The picture was mixed in Asia on Tuesday, with Hong Kong closing up 0.5 percent, while Tokyo slumped 2.2 percent and Shanghai was closed for a Chinese public holiday.
Evergrande founder Xu Jiayin said in a letter to staff that he “firmly believes Evergrande will be able to step out of the darkest moment soon”.
Beyond the Chinese real estate saga, “Worries about stretched valuations, peak policy support, and political gamesmanship between – and within – the parties in Washington have kept the market’s bullish bias in check,” wrote Briefing.com analysts.
Observers predict the US Federal Reserve will use its policy meeting beginning on Tuesday to set out its timetable for tapering the vast bond-buying monetary easing programme that has been a key driver of a global recovery for more than a year.
A battle in Washington to raise the US debt limit was also fuelling concern that the government could miss payments on its debt obligations, sparking a disastrous default.
- Travel optimism -
On the corporate front, shares in Universal Music, the world’s biggest label with a lineup of megastars from The Beatles to Taylor Swift, surged on its stock market debut, giving the company a valuation exceeding $50 billion.
ThinkMarkets analyst Fawad Razaqzada said sentiment also improved after Washington announced that it will lift Covid travel bans on all air passengers in November if they are fully vaccinated and undergo testing and contact tracing.
The news boosted the travel sector.
“The better mood is a reflection of optimism about travel returning to some form of normalcy after the United States announced it will allow fully vaccinated people to travel to the US,” Razaqzada said.
Rising Covid infections, a slowing global recovery and a brewing energy crunch are also weighing on markets.
The International Energy Agency urged Russia to send more gas to Europe, as the continent faces skyrocketing prices for the fuel.
- ‘Uneven’ recovery -
The OECD on Tuesday warned of an “uneven” global economic recovery as it lowered its 2021 growth forecasts for the world and the United States while raising the outlook for Europe.
In Asia trading, Hong Kong-listed real estate firms – which took the brunt of the selling on Monday, tanking more than 10 percent – eked out gains.
But Evergrande, which has fallen more than 80 percent this year alone, ended further in negative territory.
Attention is on what happens next in the Evergrande saga, with the firm – wallowing in debts of more than $300 billion – due to pay interest to bondholders on two notes on Thursday.
- Key figures around 1530 GMT -
New York - Dow: UP 0.4 percent at 34,116.49 points
London - FTSE 100: UP 1.0 percent at 6,970.24 (close)
Frankfurt - DAX: UP 1.2 percent at 15,313.05 (close)
Paris - CAC 40: UP 1.3 percent at 6,539.52 (close)
EURO STOXX 50: UP 1.1 percent at 4,087.92
Hong Kong - Hang Seng Index: UP 0.5 percent at 24,221.54 (close)
Tokyo - Nikkei 225: DOWN 2.2 percent at 29,839.71 (close)
Shanghai - Composite: Closed for a holiday
Euro/dollar: DOWN at $1.1723 from $1.1726 at 2100 GMT
Pound/dollar: DOWN at $1.3655 from $1.3657
Euro/pound: DOWN at 85.85 pence from 85.86 pence
Dollar/yen: DOWN at 109.28 yen from 109.44 yen
Brent North Sea crude: UP 0.4 percent at $74.21 per barrel
West Texas Intermediate: UP 0.2 percent at $70.45 per barrel