S&P collapses as Chinese contagion fears spike in volatility By Investing.com
By Yasin Ebrahim
Investing.com – The S&P 500 slid into the red again on Monday, amid a jolt of volatility that swept through the market as investors pondered the broader implications of a liquidity crunch at China Evergrande Group.
The 2% drop, the 2% drop, or 766 points, the Nasdaq fell 2.6%.
China Evergrande Group, the second-largest real estate company in China, has liabilities of more than $ 300 billion, and reports suggest it will not meet an interest payment deadline on its offshore bonds due Thursday.
The failure of the Chinese real estate giant to repay its debts could force it into bankruptcy, triggering a wider liquidity crisis that some say could trigger an economic crisis in China and seriously hamper global growth.
The – Wall Street’s so-called fear gauge – has jumped more than 30%, a sign that investors are increasingly nervous about the fallout from an economic crisis in China at a time when Beijing is cracking down on debt in sectors such as real estate.
“The source of the angst lies in lingering concerns about the wider implications of the worsening developments in the besieged China Evergrande group. […] reports that more companies in the real estate sector could be potential targets for Beijing regulators, ”Daiwa Capital Markets said in a note.
Fears of a potential economic crisis in China, the world’s largest energy consumer, have caused oil prices to fall and energy to drop by more than 4%.
Devon Energy (NYSE :), APA (NASDAQ :), Hess (NYSE 🙂 led the downside in energy.
Financials, meanwhile, were dragged down by the fall in bank stocks amid falling US Treasury yields, with Citigroup (NYSE :), Fifth Third Bancorp (NASDAQ 🙂 and SVB Financial (NASDAQ 🙂 suffered heavy losses.
Technology was also a part of the sell-off, with investors appearing to take a mental break ahead of the two-day Federal Reserve meeting starting on Tuesday.
Parent Alphabet of Google (NASDAQ :), Apple (NASDAQ :), Facebook (NASDAQ :), Amazon (NASDAQ :), and Microsoft (NASDAQ :), fell more than 1%.
Travel stocks avoided market malaise, however, as airlines were boosted by the easing of travel restrictions.
The United States is expected to ease travel restrictions for international visitors vaccinated against Covid-19 in November, the White House said on Monday.
American Airlines (NASDAQ :), United Airlines (NASDAQ 🙂 and Delta Air Lines (NYSE 🙂 traded over the landline.
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