Risk-off sentiment dominates as Evergrande builds on Chinese concerns

Chinese economic concerns continue to weigh on investors today, with equity markets throughout Asia, Europe, and the US hit hard on the news that real estate giant Evergrande has filed for bankruptcy in the US. Coming at a time that has seen a number of Chinese firms under the microscope, Evergrande’s announcement is actually just a relatively normal part of a huge debt restructuring process that has been underway for some time now.

Coming just days after Michael Burry bet big on a stock market slump, traders have been keeping a close eye out for any signs of distress that would justify that move coming to fruition now. Interestingly, while concerns around the Chinese credit market have taken a toll on market sentiment, it has been Bitcoin that has seen the most significant selling pressure. With the dollar on the rise, and Elon Musk’s Space X selling down their $373 million bitcoin holding, yesterday saw a sharp selloff that has seen the crypto posterchild trading almost 10% lower for the week.

A weak UK retail sales figure provided a brief period of downside for the pound this morning, with traders wondering whether this could be indicative of a slowdown in spending as a result of tightening monetary policy and rising prices. However, while household spending is likely to show signs of strain as mortgages rise, much of today’s release appears to be weather-related thanks to this year’s largely forgettable summer.

A quiet end for the week on the economic front sees Canadian PPI and the Baker Hughes oil rig count figures provide the only releases of note. Meanwhile, yesterday’s weak price action for Walmart despite impressive earnings has served to highlight a theme throughout Q2 earnings season. Today sees data released by the likes of Deere & co, Palo Alto, and Estee Lauder.