By Geoffrey Smith
Investing.com – China’s stock markets are once again falling on disappointing economic data and the seemingly imminent standard of a major real estate developer. Europe’s energy prices are now above their record in 2008, while a large drop in stocks also supports crude oil. US industrial production data for August are on the way. Here’s what you need to know in the financial markets on Wednesday, September 15th.
1. Covid-19 hits the Chinese economy in August
China’s economy fell further in August under pressure from a flood of covid-19-driven lockdowns and the delayed effect of measures taken earlier in the year to keep the country’s credit problems under control.
Growth in retail sales fell to 2.5% compared to the year, much slower than expected, while growth in industrial production also slowed more than expected to 5.3% from 8.4%. Investment in fixed assets slowed down in parallel.
Although the figures on an annual basis also reflect the rapid improvement in baseline figures 12 months ago, they come at a time when a new crop of shutdowns in Fujian province and storms over central China and its east coast are threatening to widen disruptions both in terms of spending and industrial production patterns.
2. Evergrande ever closer to the edge
On top of all this, the country’s financial markets are trying to digest what is likely to be the biggest business standard in its history.
Developer China Evergrande Group, which has about $ 300 billion in liabilities, will not be able to make an interest payment on its debt next week, the Bloomberg Department of Housing reported as told creditors. It will also miss at least one main payment, the news wire reported.
Standard & Poor’s reduced its rating on Evergrande’s senior degt to CC, meaning a high probability of imminent default. Chinese various stock indices fell by between 0.2% and 1.8% with the worst hit.
3. The shares open higher; industrial production due to
U.S. stock markets will open up a notch higher and recover some of Tuesday’s losses as a new rise in Covid-19 cases continued to cast doubt on the course of the recovery.
The impact of the delta variant wave was evident in a 9% monthly drop in ticket prices in August, which contributed to inflation data falling below expectations on Wednesday.
Kl. 6:15 ET (1015 GMT) was 64 points higher, or 0.2%, while and both were 0.3% up.
Industrial production data fall due at 9:15 ET, while weekly numbers on mortgages are released earlier. Sectors likely to be in focus include luxury goods, where European equities fell for fear China’s rising inequality crashes could hit sales. Casino shares fell on Tuesday after reports of tighter rules planned for the Macau gaming industry.
4. Europe’s energy prices reached a record ever after a fire in interconnection
European and electricity prices hit new heights as the pressure on subcontracted spot markets worsened. The trigger for the latest price increase was a fire that took offline a connecting cable that transmits 2 gigawatts of power from France to the UK
In oil price equivalents, European gas prices are now above $ 150 per liter. Barrel, more than even at the height of the price increase in 2008. Analysts pointed out that a turnaround may come very soon as liquidity disappears in the spot markets, and the fact that European prices have now risen to a level where it will soon be profitable to divert LNG supplies from the Asian market.
The Kremlin helpfully commented that the immediate opening of the Nord Stream 2 pipeline would help ease the squeeze. The pipeline was recently completed but still needs to undergo rigorous pre-commissioning checks to be approved by the German regulator.
5. Oil supported by large decline in inventories
Crude oil prices have also hit six-week highs, thanks to a larger-than-expected rise in U.S. inventories last week, according to the American Petroleum Institute. The API said stocks fell 5.2 million barrels last week, compared to expectations of 3.9 million.
The US government’s data is due as usual at 10:30 ET.
At 6:30 AM ET, US crude oil futures rose 1.6% to $ 71.58 per share. Barrel, while futures rose 1.3% to $ 74.56 a barrel.