Europe open: Shares slip on Evergrande repayment jitters
European stocks opened lower on Friday as investors digested central bank policy decisions and monitor developments surrounding debt-strapped property developer China Evergrande.
The pan-European Stoxx 600 index was down 0.57% in early deals with all major regional bourses following suit.
Asia stocks closed mixed, with China Evergrande shares in Hong Kong down around 7%. The Wall Street Journal reported Thursday that Chinese authorities have told local officials to prepare for a potential demise of the company.
Uncertainty also remained around whether Evergrande will pay the interest that was due Thursday on a dollar-denominated bond.
“There has been no update on the coupon payment which fell due yesterday, but increasingly there are some hopes that any default would have limited contagion outside of China, due to its lesser links with the global system,” said interactive investor analyst Richard Hunter.
European Central Bank President Christine Lagarde told CNBC she believed Europe’s direct exposure to the embattled company would be “limited.”
In Germany, business morale fell for the third month running in September, as manufacturers experienced a "bottleneck recession" due to the supply chain crisis, according to a survey released on Friday.
The Ifo institute said problems in the procurement of raw materials and intermediate products “are putting the brakes on the German economy” as its business climate index fell to 98.8 from an upwardly revised 99.6 in August.
Elsewhere, the Bank of England on Thursday kept monetary policy unchanged, downgraded economic growth projections for the third quarter and warned of rising inflation.
“Alongside elevated inflation, the Bank clearly remains ready to react to any further data which suggest that the time for rate rises is edging nearer, even if the current consensus sees no action until next year at the very earliest,” Hunter said.
In equity news, German sportswear makers Adidas and Puma fell 3.44% and 2.7%, respectively, after Nike cut its fiscal 2022 sales expectations and said it expected delays during the holiday shopping season, blaming the global supply chain crisis. JD Sports also fell 2.83% on the news.
On the positive side, AstraZeneca topped the Stoxx with a 3% rise as its cancer drug Lynparza met its primary goal in a late-stage trial.