Evergrande payment boosts Asia

Investors cheer as Evergrande makes bond payment

Evergrande’s offshore coupon payment, just ahead of the default deadline, has boosted Asian equity markets today, sending the China financial contagion story off the front pages for now and removing a key weekend risk. That has helped the northern Asia heavyweights fend of the sharp fall in Nasdaq futures in Asia after poor results from Snap post the US close.

Overnight, the return of Fed taper nerves after positive US data took the edge of the intra-day rally in New York. The S&P 500 closed 0.30% higher, the Nasdaq finished 0.64% higher, while the Dow Jones sank to a loss of 0.02%. The snap result has caused a mini tech-tantrum, with Nasdaq futures falling by 0.44%, wiping almost all of its overnight gains out, with Dow futures rising 0.15% and S&P minis unchanged.

Asia is sailing on an Evergrande tailwind though. The Nikkei 225 is 0.67% higher after a torrid day yesterday for reasons I am still at a loss to explain. The Kospi has risen by 0.30%, with Nasdaq nerves capping gains while Taipei is suffering a similar fate, rising just 0.05% today.

Mainland China is performing strongly though, the Shanghai Composite has risen by just 0.10%, but the narrower financial-heavy Shanghai 50 has jumped by 1.20%. The CSI 300 is also enjoying a good day, rising by 0.90%. Hong Kong, meanwhile, has risen by 0.30%.

Singapore is 0.30% higher along with Bangkok, but Kuala Lumpur and Manila have fallen by 0.45% with Jakarta unchanged. All three may be suffering some negative pressures as commodity prices continued to ease overnight, notably coal and gas. Australian markets seem content to run the week out on a quiet note, with the Melbourne reopening today probably thinning the ranks of traders there. The pubs are busy though. The ASX 200 and All Ordinaries are unchanged on the day.

European equities would likely have risen this afternoon on the Wall Street lead, and the Evergrande payment may modestly support sentiment. However, with an avalanche of PMIs due and with Nasdaq futures being heavily sold in Asia, European investors may hit the pause button.

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