European and Asian stocks rebound as Evergrande avoids payment default

A record-breaking overnight lead from Wall Street also supported markets

European and Asian stock markets mostly rebounded on Friday as risks of contagion from heavily indebted Chinese property giant Evergrande eased, while a record-breaking overnight lead from Wall Street provided support.

“Equity markets are back on the rise as investors shrug off their recent concerns,” said Geir Lode at investment manager Federated Hermes.

Evergrande made a key offshore interest payment a day ahead of a weekend deadline, Chinese state media said on Friday, averting a default for now.

Equity markets are back on the rise as investors shrug off their recent concerns
Geir Lode, Federated Hermes

The crisis at one of China's biggest property developers, which is drowning in $300 billion of debt, has hammered investor sentiment and fuelled fears of a spillover into the wider economy.

Evergrande's share price jumped more than 4 per cent in Hong Kong, though that came a day after a drop of more than 12 per cent sparked by its announcement that the planned sale of its property services unit had fallen through.

In foreign exchange on Friday, the British pound briefly hit a 20-month high versus the euro, on increased expectations that the Bank of England will lift its main interest rate next month to combat high inflation.

The single currency took a knock also from a survey showing the eurozone economic recovery losing steam.

“The ongoing pandemic means supply chain delays remain a major concern,” said Chris Williamson, chief business economist at IHS Markit, which carries out the purchasing managers' index measuring corporate confidence.

Elsewhere, Bitcoin fell as profit-takers moved in after the digital currency hit a record $66,976 this week.

The world's leading cryptocurrency has taken another step towards mainstream status as Bitcoin forayed on to Wall Street.

A Bitcoin futures exchange-traded fund, a type of financial instrument, launched this week on the New York Stock Exchange. The new fund is a more accessible vehicle that puts Bitcoin within the grasp of even more investors.

Updated: October 22nd 2021, 12:18 PM