Dow Futures Dive More Than 500 Points, Evergrande Fears Mount—and What Else Is Happening in the Stock Market Today
Wall Street was poised for a rough start to the week Monday.
Angela WeissAFP/Getty Images
Wall Street was headed for a rough Monday, with futures for the Dow Jones Industrial Average down more than 500 points amid a broad fall in global stocks, as investors fretted over the implications of the looming failure of China’s Evergrande.
Dow futures were indicating an open around 530 points lower, after the index fell 166 points Friday to close at 34,585. Futures for the S&P 500 and Nasdaq indicated a similarly weak open.
Overseas, Hong Kong’s Hang Seng Index tumbled 3.3%, while the pan-European Stoxx 600 declined 1.8%.
Investor attention is squarely focused on China, where the seemingly imminent failure of highly indebted property developer Evergrande looms large. Global sentiment has been rattled by the group, which has some $300 billion in liabilities, including debt obligations due this week that it can’t pay. The prospect of wider contagion in financial markets from a restructuring or liquidation of Evergrande was top of mind Monday.
Also read: Evergrande Has Debt Due Next Week It Can’t Pay. Why It Isn’t Just China’s Problem.
“Contagion risks from the Evergrande meltdown are the prime cause of today’s selloff. You’ve got all kinds of banks and insurers caught in the net but ultimately, I don’t see this as a Lehman’s moment right now,” said Neil Wilson, an analyst at broker Markets.com.
“What we are seeing today is how risks get priced gradually then suddenly. It is definitely though a major cause for investor concern right now and it is possible we see further losses before the dip finally gets bought,” Wilson added.
The Evergrande concerns come as a major decision from the U.S. Federal Reserve is due Wednesday. The central bank’s monetary policy-making body, the Federal Open Market Committee, will meet Tuesday and Wednesday before Fed Chair Jerome Powell makes a statement.
Investors are closely watching the Fed for clues as to how and when the central bank will begin slowing, or tapering, its Covid-19 pandemic-era program of monthly asset purchases, which add liquidity to markets.
Here are seven stocks on the move Monday:
Evergrande fell a further 10.2% in Hong Kong, as it faces the prospect of not being able to pay bank loan interest due this week.
European airlines IAG
—the owner of British Airways—and Lufthansa were more resilient, with IAG climbing 1.3% and Lufthansa 2.3% to rise above the selloff in stocks.
British insurer Prudential tumbled 7.2% amid plans to raise $2.9 billion in a Hong Kong share sale.
Shares in U.S. Covid-19 vaccine makers fell, as Pfizer slipped 1.8%, with its German partner BioNTech down 4.6%, and Moderna declining 2.8%—all in U.S. premarket trading. A Food and Drug Administration advisory panel voted Friday to reject a broad rollout of vaccine booster shots.
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