US markets plunge in losses sparked by fear of default by China’s Evergrande Group

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Wall Street has suffered its sharpest decline since May as the S&P 500 fell 1.7 percent, and the Dow Jones Industrial Average closed down 614 points, or 1.8 percent.

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The tech-focused Nasdaq also fell 2.2 percent on a wild day of trading on a number of emerging risks, including the possibility that one of China’s biggest property developers could default on hundreds of billions of dollars in debt.

Investors are worried that China Evergrande Group’s problems could cause a ripple effect through financial markets – the Hang Seng index dropped four percent as the default looms for the company.

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Evergrande Group is the most debt-laden property developer in the world, with liabilities of over $300bn. Earlier in September, it warned that it could not meet its obligations to lenders, investors and suppliers.

Construction has stalled on several of the company’s projects and there are growing concerns that its failure could lead to a wider crisis in the Chinese real estate sector, a key economic engine for the country.

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The government in Beijing has taken no steps to salvage Evergrande, seeing the firm as an example to other debt-ridden corporate giants – although protests from home buyers, workers and others may have urged officials to intervene. can exert pressure. .

In addition to problems overseas, the Federal Reserve began a two-day meeting on Tuesday to decide whether the economy’s monetary stimulus could end amid accelerating inflation and a steady recovery in the job market.

As the deadline for raising the debt limit draws closer, investors also fear a partisan attitude in Washington could make a government shutdown a distinct possibility.

The pandemic also remains a concern with cases of COVID-19 persisting at levels last seen in January as the delta variant causes massive hospitalizations and deaths, almost entirely of unvaccinated individuals. in between. With both cold weather and flu season in place, there are concerns about what measures may need to be taken in the winter to prevent another surge in cases.

Monday’s sell-off saw the Dow drop 971 points to a session low, but the market took some of that off.

Microsoft, Google-owned Alphabet, Amazon, Apple, Facebook and Tesla Inc were among the biggest drags on the S&P 500, but all 11 major sectors were down, with financially sensitive groups such as energy at the bottom.

Shares of US airlines with large international networks ended the day down only slightly, helped by news that in November the government will ease travel restrictions for passengers from China, India, the UK and several other European countries, provided they have a covid – 19 Vaccines.

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Credit: www.independent.co.uk /

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