Asian markets mixed after China Evergrande warns of cash woes
Hong Kong dropped 1.2% but the Shanghai Composite index rose. South Korea’s benchmark advanced but Tokyo and Sydney declined.
The worry is that unsustainable levels of debt in the property sector might trigger a financial crisis. China wants to avoid a bailout but also is unlikely to let the situation deteriorate to the point where problems would cascade to that level. Chinese tech giant Alibaba 9988, -5.03%, which has been embroiled in a multi-faceted crackdown on the industry, also dragged the benchmark lower, losing 5.4% after the company said it was replacing its chief financial officer, Maggie Wu and overhauling its e-commerce business.
The S&P 500 SPX, -0.84% closed 0.8% lower, at 4,538.43. The Dow DJIA, -0.17% lost 0.2% to 34,580.08, while the Nasdaq COMP, -1.92% sank 1.9% to 15,085.47. What the Fed does matters for stocks because low interest rates have been one of the main reasons the S&P 500 has roughly doubled since the early days of the pandemic. Low rates encourage borrowers to spend more and investors to pay higher prices for stocks.
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