Sep 21, 2021
European stock markets are expected to open higher Tuesday, rebounding from the previous session’s sharp losses, although worries remain about the contagion risks associated with property giant China Evergrande Group, while the Federal Reserve's policy meeting continues to dominate thinking.
At 2:05 AM ET (0605 GMT), the DAX futures contract in Germany traded 0.4% higher, CAC 40 futures in France climbed 0.2% and the FTSE 100 futures contract in the U.K. rose 0.5%.
European equities sold off heavily on Monday, with the DAX ending 2.3% lower and the CAC 40 down 1.7%, sparked by concerns of a disorderly default in China, potentially hurting China's property and financial sectors at a time when growth in the world's second-largest economy is already slowing.
Evergrande has an $83.5 million interest payment for its March 2022 bond due on Thursday and a second $47.5 million interest payment due on Sep. 29 for its March 2024 notes. It has already missed a small payment to bank creditors.
However, the main focus Tuesday will be on the Federal Reserve, with the U.S. central bank starting its two-day meeting. Most expect the Fed to give a strong signal that it will start running down its bond purchases before year end, while there is more doubt about whether the central bank's so-called 'dot plot' will shift to reflect expectations of earlier rate hikes.
Back in Europe, the auto sector will be in focus after German newspaper Handelsblatt reported that an environmental NGO has sued BMW (DE:BMWG) and Daimler (OTC:DDAIF) for refusing to tighten their carbon emissions targets and give up fossil fuel-emitting cars by 2030.
Also of note, Swiss drugmaker Novartis (SIX:NOVN) announced Tuesday that it has bought gene therapy specialist Arctos Medical to boost its efforts finding treatments for patients with severe vision loss.
Crude prices also rebounded Tuesday, advancing after days of losses after indications that disruptions to crude output in the U.S. Gulf of Mexico will last into next year.
Royal Dutch Shell (LON:RDSa), the biggest oil producer in the region, said Monday that production from two of its largest fields there will not resume until 2022 given the damage caused by Hurricane Ida in late August.
Investors will now focus on crude oil supply data from the American Petroleum Institute later in the session for more information.
By 2:05 AM ET, U.S. crude futures traded 1% higher at $70.83 a barrel, while the Brent contract rose 0.9% to $74.57. Both contracts slumped around 2% last session.
Additionally, gold futures traded flat at $1,763.75/oz, while EUR/USD traded 0.1% higher at 1.1733.