Despite reducing its losses in the last minutes, US stocks continued their poor performance during the month of August, to end the week with the worst loss since the first quarter of the year, driven by investors’ desire to get rid of high-risk assets, in conjunction with the Chinese real estate market turmoil.
And after the Chinese real estate developer, Evergrande, announced that it had submitted a request to restructure its debts and protection from creditors, on Thursday, the losses of the main stock indices extended to Friday, which witnessed the Nasdaq decline by 0.2%, and the S&P 500 index remaining in the red zone, albeit at the lowest rate. A recordable loss, while the Dow Jones Industrial Average survived, adding 0.07%.
On Friday, China’s Evergrande, which is struggling to avoid defaulting on $340 billion in debt, said it was asking a US court to approve a restructuring plan for foreign bondholders, rejecting what it said were news reports that it had filed for bankruptcy protection.
The echo of bad news from China came as data in Hong Kong showed that foreign investors fled the Chinese stock and bond market over the past weeks. Analysts attributed the mass flight from the Chinese markets to three main factors, which are the possibility that China will not conduct more stimulus to the Chinese economy, the continuation of the debt crisis of real estate companies, and the strength of the investment return in US bonds.
In Europe, the stock markets fell on Friday, with a decline in sentiment and a tendency to be cautious, at a time when investors in various parts are awaiting developments in the Chinese real estate market, the future of monetary policy, and the decisions of the European Central Bank.
And by the end of the last trading days of the week, the Stoxx 600 index of European stocks was down by 0.6%, after it compensated for part of the losses in the first hours.
Mining stocks declined by 1.5%, and retail stocks lost 1.2%, while almost all major sectors and stock exchanges slid into the red zone.
The European stock index closed Thursday’s session down 0.9%, after the minutes of the US Federal Reserve meeting in July showed that further interest rate hikes were not far from the table.
In a related way, oil prices rose by about 1% today, Friday, amid indications of slowing production in the United States, but the two benchmarks ended their longest series of weekly gains in 2023 due to growing concerns about the growth of global demand, with the continued slowdown in Chinese growth.
Brent crude futures rose 68 cents, or 0.8%, to $84.80 a barrel upon settlement, and US West Texas crude futures rose 86 cents, or 1.1%, to $81.25 a barrel upon settlement.
The two benchmarks rose today, Friday, after data showed that the number of oil and natural gas rigs in the United States decreased for the sixth consecutive week. The decline in US production could exacerbate the expected supply shortages for the remainder of the year.
The concerns were driven by supply cuts by the Organization of the Petroleum Exporting Countries and its allies (OPEC+), which helped push oil prices up for seven consecutive weeks since June. Brent crude rose by about 18%, while US West Texas crude increased by 20% during the seven weeks ending on August 11.
However, oil prices fell this week by about 2% compared to last week, as the worsening real estate crisis in China increased concerns about the slowdown in the economic recovery in the country, and reduced the risk appetite of investors.
“Investors remain concerned amid slowing global growth, and global supplies that remain tight,” said Rob Haworth, senior official at US Bank Wealth Management.
2023-08-18 21:36:07
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