European Shares Headed For Weak Opening
European stocks are likely to open lower on Thursday as investors fret about the debt woes in China’s property sector and react to the latest batch of earnings results from the United States.
Tesla’s third-quarter revenue beat expectations, while IBM reported lower revenue than analysts had expected after the closing bell Wednesday.
Asian markets traded mixed, giving up early gains after an asset sale at embattled developer Evergrande collapsed.
The heavily indebted developer at the centre of a credit crunch in China’s real estate sector announced that a deal to sell a $2.6bn stake in its property services unit had fallen through.
The latest setback comes just ahead of the expiry of a 30-day grace period for Evergrande to pay $83.5 million in coupon payments for an offshore bond.
Statements from other property developers also exacerbated investor concern of contagion.
Chinese Estates Holdings said it would book a loss of $29m in its current fiscal year from the sale of bonds issued by property developer Kaisa Group.
Modern Land has withdrawn its plan seeking permission from its debtholders to allow the Chinese property developer to delay repaying a $250 million bond.
Gold nudged higher on a weaker dollar, while oil gave up early gains on concerns about elevated inflation and risks from China’s property sector.
Public sector finance data from the U.K. and business confidence survey results from France are due later in the session, headlining a light day for the European economic news.
Across the Atlantic, trading could be impacted by reaction to reports on weekly jobless claims, existing home sales and leading economic indicator.
Overnight, U.S. stocks ended broadly higher as traders reacted positively to another batch of largely upbeat corporate earnings news and shrugged off the Fed’s Beige Book report showing that labor and supply shortages are cramping the U.S. economy.
The Dow and the S&P 500 both rose about 0.4 percent while the tech-heavy Nasdaq Composite index ended marginally lower.
European markets hit six-week highs on Wednesday as the third-quarter earnings season unfolds.
The pan European Stoxx 600 advanced 0.3 percent. The German DAX and the U.K.’s FTSE 100 both inched up marginally while France’s CAC 40 index gained half a percent.
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