Global markets pausing amid Evergrande crisis

Global markets pausing amid Evergrande crisis

Global equities came under pressure yesterday as the Evergrande crisis weighed on the markets. The major Chinese real estate developer warned that it may not be able to repay on time, a statement that accelerated the decline of its shares amid a broad-scale sell-off that risked spilling over into other sectors.

 

Shares of Evergrande were trading around $30 in 2019 but have now closed at the lowest level since 2010 as the risk of default is higher than ever.

 

While some analysts believe that the exposure from Evergrande is fairly distributed among banks and the Chinese economy, others are seeing this as the tip of the iceberg which could lead to other leveraged developers defaulting and going bankrupt. This remains a scenario that could lead to bigger and more nerve-racking losses, according to some traders.

 

While Evergrande accelerated the decline, global markets have been grinding lower for the past several sessions as traders book profits and look to reposition at lower prices.

 

The Dow Jones has dropped from the mid 35,000s to a recent low just above 33,600, posted yesterday. The Nasdaq also dipped over 800 points and now trades around 15,100. Euro Stoxx 50 held the 4,000 area after around a 6% dip from recent highs.

 

At the same time, a rush towards safety-linked assets saw bond prices moving higher with 10-year Note yields down to around 1.31%. This was also the case for the German Bund where yields dipped to -0.32%.

 

Given the globalization of trading and financial markets, it’s no surprise that one company could have a severe effect on the markets, even for a short while. Evergrande is one example, and while the outcome is not clear on what could happen next, it’s reminiscent of the 2008 crisis which caught many people off-guard and saw the markets sharply lower amid selling that turned into a lightning chain effect.

 

With CFI, you can trade thousands of CFDs on Stocks, Forex, Commodities, Indices, and ETFs from one single platform. If you are new to the financial markets, you can start with a risk-free demo account and for the more seasoned traders, opening a real account is a straightforward process that requires very little time. CFI offers its clients many services and features including free daily webinars, dedicated account managers, daily technical reports, and highly competitive conditions that include fast execution and spreads from zero pips.

 

Click here to find out more.

 

The content present in this article reflects the opinions and views of the author and does not necessarily reflect the position of CFI. The material published on this blog is provided for informational purposes only and should not be considered as investment advice. The Company is not responsible for the decisions and choices of the investor who has full and free will to make decisions that they see appropriate upon the investor’s sole discretion.

CFI Financial Group is an award winning global financial markets provider with over 23 years of experience and regulated entities in several jurisdictions, focused on offering impeccable execution and trading conditions including very low spreads, professional services, dedicated support and powerful tools.
CFI Financial Group has regulated subsidiaries in
London • Larnaca • Beirut • Amman • Dubai • Port Louis
Credit Financier Invest - CFI LEBANON
BDL no. 40
1019238,
Ellipse Center 3rd floor, Charles
Malek Avenue, Achrafieh

CFI provides execution-only services and does not provide any investment advice. To make an investment decision, you cannot rely on the content of this website, or on any information, opinion, report or other materials (“Information”) you receive from CFI, or its representatives. Such Information is general and does not consider your objectives and your financial situation, thus they shall not be considered in any way as an express or implied promise nor a guarantee of any profit or limit of loss. CFI shall not bear any liability in case you used or relied on such Information. Please ensure that you make your own research and seek independent advice if necessary.

Forex and CFDs are leveraged products that incur a high level of risk. A small adverse market movement may expose the client to lose the entire invested capital. The majority of retail client accounts lose money when trading in CFDs. Please be aware of trading risks and that you could sustain a loss exceeding your deposited funds, even if a stop loss is used.

CFI Lebanon is regulated by the Banque du Liban and the Capital Markets Authority

niss
forme
The Best Online Financial Trading Services, Middle East, 2020
Entrepreneur Magazine

Please publish modules in offcanvas position.