The report pointed to resurgent coronavirus cases and mounting supply chain problems and labour shortages affecting many economies
Shares dropped in Asia on Thursday after further losses on Wall Street after a Federal Reserve report showed U.S. economic activity slowed this summer.
The report pointed to resurgent coronavirus cases and mounting supply chain problems and labour shortages affecting many economies. Benchmarks dropped in Tokyo, Hong Kong, Shanghai and Sydney.
Chinese markets have been chilled by further moves by the government to strengthen controls over online businesses that thrived during the pandemic.
Meanwhile, ratings agencies say Evergrande Group, one of China’s biggest real estate developers, looks increasingly likely to default on its debts following news reports it will delay interest payments on bank loans. The company is selling assets to raise cash and faces complaints it is late in paying contractors and in delivering projects to customers.
Ratings agencies Moody’s and Fitch cut their ratings on Evergrande debt this week to a level that indicates they believe the company is likely to default on bond payments due to lack of cash.
Chinese authorities are trying to reduce high debt levels in the economy and have urged Evergrande to resolve its more than $300 billion in debt, but financial analysts to suggest they might allow a default while trying to reduce its impact on the financial system.
Tokyo’s Nikkei 225 dropped 0.5%. In Hong Kong, the Hang Seng shed 1.2%, while the Shanghai Composite index edged 0.1% lower. In Sydney, the S&P/ASX 200 dropped 1.2%, and the Kospi in Seoul declined 0.9%. Shares fell in Taiwan but rose in Singapore, Malaysia and Indonesia.
The yield on the 10-year Treasury note dropped to 1.33% after rising sharply on Tuesday to 1.37%.
The Federal Reserve’s latest survey of the nation’s business conditions said U.S. economic activity downshifted in July and August.
The Fed said the slowdown was largely attributable to a pullback in dining out, travel and tourism in most parts of the country, reflecting concerns about the spread of the highly contagious delta variant.
The S&P 500 dropped 5.96 points to 4,514.07, which is 0.5% below the all-time high the index set last Thursday. The Dow Jones Industrial Average shed 0.2%, to 35,031.07, and the Nasdaq composite declined 0.6% to 2,249.73. The tech-heavy index’s decline ended a four-day winning streak.
