The next couple of days may well be the calm before the storm before a slew of economic data greets us from the mid-week onwards. Germany kicks things off on Wednesday by releasing a whole catalogue of data pertaining to retail sales, CPI, unemployment and inflation. Later in the day, the Federal Reserve is scheduled to announce its interest rate decision, although the odds of anything major being revealed are minimal. Euro traders will have to stay on their toes on Thursday, as the EU releases CPI, unemployment and inflation data for the entire economic zone, before the Bank of England announces its own interest rate decision. As if this were not enough, Non-Farm Payrolls hit the newsreels on Friday, with all the furore this usually entails.
That is not to say there are no immediate items worthy of attention. This morning, Hong Kong’s high court ordered the liquidation of China Evergrande, following the group’s failure to offer a concrete restructuring plan of its $300 billion in liabilities. The Chinese development giant defaulted on a bond repayment over two years ago and has since been unable to convince creditors that it has any real path to solvency, leading Justice Linda Chan to the conclusion that “it is time for the court to say enough is enough”. The news prompted Evergrande shares to plummet 20% in early trading on Monday, triggering trading halts that also extended to its subsidiaries Evergrande Property Services and Evergrande New Energy Vehicle Group. The news will do nothing to restore confidence in China’s perilous property market, but more importantly raises the prospect of contagion to other sectors of the world’s second largest economy.
Oil prices continued to climb in light of renewed attacks on vessels in the Red Sea over the weekend, pushing Brent Crude to flirt with $84 a barrel this morning. The instability is causing shipping rates to increase across routes throughout Asia, even those not using the affected waterway. At this stage, it is still very unclear whether or not these attacks mark the start of a greater conflict.
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