Europe open: Shares downbeat as Evergrande, inflation woes hit sentiment
European stocks headed back into negative territory at the opening on Tuesday as weak US markets and news of China Evergrande missing a third bond payment hit sentiment.
The pan-European Stoxx 600 dropped 1% in early trade, with all major regional bourses lower.
Hong Kong’s Hang Seng index shed 1.71% as debt-burdened China Evergrande missed its third round of bond payments in three weeks, intensifying market fears over contagion involving other property developers.
Reports from the region cited some bondholders saying they did not receive coupon payments totalling $148m on Evergrande's April 2022, April 2023 and April 2024 notes due on Tuesday, after two other payments it missed in September.
US stocks fell overnight as investors fretted over surging oil prices and the impact of cost inflation ahead of major third quarter earnings results.
In the UK, job vacancies hit a 20-year high between July and September, while the unemployment rate fell in the three months to August as the jobs market continues to recover.
According to figures released on Tuesday by the Office for National Statistics, job vacancies rose by 318,000 from pre-pandemic January to March 2020 levels to 1.1 million, with accommodation and food services seeing a near-50,000 jump.
Meanwhile, the unemployment rate fell to 4.5% in the three months to August from 4.6% in the three months to July. The figures also showed that the number of payroll employees rose in September by 207,000 to a record 29.2m, and is now higher than it was before the pandemic.
"Despite US bond markets being closed for Columbus Day, inflation nerves continued to rattle market nerves driven by energy prices, which surged once again overnight,” said Oanda analyst Jeffrey Halley.
"Goldman Sachs downgraded its US growth forecasts overnight, and the quarterly earnings season, which starts this week, has equity markets on edge over whether profit forecasts will be tempered for 2022 given the rich valuations prevalent in stocks everywhere.
“Add in the creeping, but relentless implications of the Fed taper and it is no surprise that equity markets remain on edge."
In equity news, shares in low-cost airline easyJet fell despite the company saying it turned cash positive in the final quarter of its fiscal year, driven by an improvement in intra-European and UK domestic travel as Covid lockdown measures eased.
The carrier said it generated £40m in cash in the three months to September 30. It expects a headline pre-tax loss of £1.14bn - £1.17bn compared to consensus of £1.175bn.
Swiss fragrance and flavour maker Givaudan slipped 2.3% despite reporting a sales growth of 7.7% in the first nine months of the year.