Global shares mostly fall on China energy, Evergrande fears

TOKYO (AP) – Global shares mostly fell yesterday as concerns about China chipped away at investor optimism following a mixed finish on Wall Street.

France’s CAC 40 declined 1.4 per cent in early trading to 6,561.06. Germany’s DAX slipped 0.8 per cent to 15,443.31. Britain’s FTSE 100 shed 0.4 per cent to 7,035.80. United States (US) shares were set for a retreat, with the future for the Dow Industrials down 0.4 per cent to 34,617.00. The S&P 500 future lost 0.7 per cent to 4,404.25.

In Asia, Japan’s benchmark Nikkei 225 lost 0.2 per cent to finish at 30,183.96.

Australia’s S&P/ASX 200 slipped 1.5 per cent to 7,275.60. South Korea’s Kospi declined 1.1 per cent to 3,097.92. Hong Kong’s Hang Seng added 1.2 per cent to 24,500.39. The Shanghai Composite index climbed 0.5 per cent to 3,602.22.

A power crunch in some parts of China has shut down factories and left some households without electricity under an effort to meet official energy use targets.

That could have global repercussions, including on supplies needed for manufacturing throughout Asia, coming right ahead of the year-end shopping season.

A man walks past a bank’s electronic board showing the Hong Kong share index yesterday. PHOTO: AP

That’s on top of parts and raw material shortages that already ail regional manufacturing because of supply disruptions caused by the coronavirus pandemic.

Analysts said the power shortage in China could become prolonged as the demand for coal and natural gas surges during the winter.

Another lingering market worry resonating from China is the possible collapse of one of China’s biggest real estate developers, Evergrande Group, which is struggling to avoid a default on billions of dollars of debt.

“Crucially, contagion risks loom large due to transmission within the property sector due to similar risks to home-buyers and banks via balance sheet exposures,” said Vishnu Varathan of the Asia & Oceania Treasury Department at Mizuho Bank. “Fact is Evergrande is at best a risk that has temporarily abated but is far from abolished.”

The vote for the leader of Japan’s ruling party, set for today, was also weighing on Tokyo trading, according to analysts, as players took a wait-and-see attitude. Four candidates are in the race to replace Prime Minister Yoshihide Suga, who is stepping down after a year in office. No major economic or foreign policy changes are expected, as the pro-US Liberal Democratic Party has ruled Japan almost continually in recent decades.

Consumer spending has been the key driver for the economic recovery and it has been crimped in part by rising cases of COVID-19 because of the highly contagious Delta variant, which remains a huge concern in Asia.

In energy trading, benchmark US crude added 73 cents to USD76.18 a barrel in electronic trading on the New York Mercantile Exchange. It gained USD1.47 to USD75.45 per barrel on Monday.

Brent crude, the international standard, rose 68 cents to USD80.21 a barrel.

In currency trading, the US dollar rose to JPY111.26 from JPY110.00. The euro cost USD1.1679, inching down from USD1.1684.