Stocks are expected to be erratic due to “quadruple witching” day, when four different futures and options contracts expire
17 September 2021 - 12:04
by Carolyn Cohn and Alun John
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
The London Stock Exchange building. Picture: REUTERS/TOBY MELVILLE
London/Hong Kong — World shares steadied on Friday above three-week lows set in the previous session though they were heading for a weekly loss on China jitters and global growth concerns, while strong US retail sales data buoyed the dollar.
Shares in embattled property developer China Evergrande, which has two-trillion yuan ($310bn) in liabilities and faces an $80m bond coupon payment next week, dropped a further 0.4% on Friday, down 28% this week.
The editor-in-chief of state-backed Chinese newspaper Global Times warned Evergrande that it should not bet on a government bailout on the assumption it is “too big to fail”.
“The underlying risk for markets is if Evergrande is not bailed out by the Chinese government,” said Giles Coghlan, chief currency analyst at HYCM, though he added: “I don't think Evergrande is a Lehman scenario - it's not going to be a massive systemic risk.”
MSCI's world equity index gained 0.16% to 736.36 but was down 0.12% on the week. The index hit a record high of 749.16 on September 7.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.15% but was set to finish down 2.7% on the week, which would be its worst week in four.
European shares put on a better performance, however, on track for weekly gains as news that Britain was mulling easing travel restrictions boosted airlines and hotel groups.
The pan-European Stoxx 600 index rose by 0.7% and UK stocks gained 0.4%.
US stock futures, the S&P 500 e-minis, were unchanged.
Stock market prices were expected to be erratic on Friday due to “quadruple witching” day, when four different futures and options contracts expire.
Chinese data earlier this week suggested growth in the world's second-largest economy will slow in the second half of this year, while economists polled by Reuters said they expected the US economic rebound to have been dented in the third quarter, partly due to the spread of the Delta coronavirus variant.
Respondents to that poll also pushed back expectations for the US Federal Reserve to announce a tapering of asset purchases to November.
This means next week's Fed policy meeting is likely less consequential than would have been expected a few months ago when many investors felt a September tapering announcement was an option. But traders will be still watching closely for any policy clues from the meeting, especially after the US posted an unexpected increase in August retail sales on Thursday.
The sales data “confirmed the expectations of the majority in the market, who expect tapering ... to begin this year”, Commerzbank analysts said in a note.
The data also boosted the dollar, which held steady near the previous day's three-week high against an index of currencies . It was little changed against the euro at $1.1776.
The yield on benchmark 10-year Treasury notes was 1.3362%, little changed from its US close of 1.331%, after also rising on the data.
The yield on German 10-year government bonds rose two basis points to -0.288%, close to a two-month high hit on Thursday, after a Financial Times report suggested the European Central Bank expects to hit its inflation target by 2025.
Hong Kong's Hang Seng index rose 0.47%, with traders looking for oversold stocks after the benchmark posted its lowest close in 10 months the day before.
Australian shares fell 0.8%, as a drop in iron ore prices hurt miners, but Chinese blue chips rose 1% and Japan's Nikkei gained 0.58% to head back towards a 31-year high hit on Monday.
US crude fell 0.52% to $72.22 a barrel, and Brent crude dropped 0.41% to $75.36 a barrel, as more supply came back online in the US Gulf of Mexico after two hurricanes.
Gold recovered somewhat, with the spot price trading at $1,761 an ounce, up 0.45% after falling 2.3% on Thursday as higher yields hurt the non-interest bearing metal.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
World stocks steady after setting three-week lows
Stocks are expected to be erratic due to “quadruple witching” day, when four different futures and options contracts expire
London/Hong Kong — World shares steadied on Friday above three-week lows set in the previous session though they were heading for a weekly loss on China jitters and global growth concerns, while strong US retail sales data buoyed the dollar.
Shares in embattled property developer China Evergrande, which has two-trillion yuan ($310bn) in liabilities and faces an $80m bond coupon payment next week, dropped a further 0.4% on Friday, down 28% this week.
The editor-in-chief of state-backed Chinese newspaper Global Times warned Evergrande that it should not bet on a government bailout on the assumption it is “too big to fail”.
“The underlying risk for markets is if Evergrande is not bailed out by the Chinese government,” said Giles Coghlan, chief currency analyst at HYCM, though he added: “I don't think Evergrande is a Lehman scenario - it's not going to be a massive systemic risk.”
MSCI's world equity index gained 0.16% to 736.36 but was down 0.12% on the week. The index hit a record high of 749.16 on September 7.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.15% but was set to finish down 2.7% on the week, which would be its worst week in four.
European shares put on a better performance, however, on track for weekly gains as news that Britain was mulling easing travel restrictions boosted airlines and hotel groups.
The pan-European Stoxx 600 index rose by 0.7% and UK stocks gained 0.4%.
US stock futures, the S&P 500 e-minis, were unchanged.
Stock market prices were expected to be erratic on Friday due to “quadruple witching” day, when four different futures and options contracts expire.
Chinese data earlier this week suggested growth in the world's second-largest economy will slow in the second half of this year, while economists polled by Reuters said they expected the US economic rebound to have been dented in the third quarter, partly due to the spread of the Delta coronavirus variant.
Respondents to that poll also pushed back expectations for the US Federal Reserve to announce a tapering of asset purchases to November.
This means next week's Fed policy meeting is likely less consequential than would have been expected a few months ago when many investors felt a September tapering announcement was an option. But traders will be still watching closely for any policy clues from the meeting, especially after the US posted an unexpected increase in August retail sales on Thursday.
The sales data “confirmed the expectations of the majority in the market, who expect tapering ... to begin this year”, Commerzbank analysts said in a note.
The data also boosted the dollar, which held steady near the previous day's three-week high against an index of currencies . It was little changed against the euro at $1.1776.
The yield on benchmark 10-year Treasury notes was 1.3362%, little changed from its US close of 1.331%, after also rising on the data.
The yield on German 10-year government bonds rose two basis points to -0.288%, close to a two-month high hit on Thursday, after a Financial Times report suggested the European Central Bank expects to hit its inflation target by 2025.
Hong Kong's Hang Seng index rose 0.47%, with traders looking for oversold stocks after the benchmark posted its lowest close in 10 months the day before.
Australian shares fell 0.8%, as a drop in iron ore prices hurt miners, but Chinese blue chips rose 1% and Japan's Nikkei gained 0.58% to head back towards a 31-year high hit on Monday.
US crude fell 0.52% to $72.22 a barrel, and Brent crude dropped 0.41% to $75.36 a barrel, as more supply came back online in the US Gulf of Mexico after two hurricanes.
Gold recovered somewhat, with the spot price trading at $1,761 an ounce, up 0.45% after falling 2.3% on Thursday as higher yields hurt the non-interest bearing metal.
Reuters
Gold edges higher but heads for weekly loss on stronger dollar
Oil slides as offshore US output slowly returns to normal
Asian shares stabilise amid China jitters
China and Hong Kong push Asian shares lower
Gold slips as Fed gears up to discuss stimulus tapering
Oil climbs after storms put pressure on US stocks
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
JSE lifts as investors mull over Chinese regulations
JSE faces mixed markets on Friday amid potential collapse of China property firm
MARKET WRAP: Miners and banks weigh down JSE
Market data — September 16 2021
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.