European markets set for higher open despite nerves over China; Fed meeting ahead
European stocks are expected to open higher on Tuesday, bouncing back from heightened investor nerves over a Chinese property developer and ahead of a two-day meeting of the U.S. Federal Reserve.
London’s FTSE is seen opening 42 points higher at 6,949, Germany’s DAX 75 points higher at 15,209, France’s CAC 40 up 19 points at 6,464 and Italy’s FTSE MIB 122 points higher at 24,814, according to IG.
The rebound for European stocks comes after markets got off to a poor start to the week, closing lower on Monday amid investor fears surrounding embattled property developer China Evergrande Group and concerns about the contagion risk for the wider Chinese and global economy.
Read more: The global economy could feel the effects of China’s Evergrande crisis. Here’s what investors should know
Hong Kong equities saw a big sell-off during the Asia trading session on Monday with the benchmark Hang Seng index plunging 4% as the developer teetered on the brink of default. Shares of China Evergrande Group plummeted 10.24% during the Asian trading session, after falling as much as 17% earlier.
Shares in Asia-Pacific were lower in Tuesday trade, with markets in mainland China and South Korea closed on Tuesday for a holiday.
European markets were also rattled by sharp declines in the U.S. on Monday where stocks began the week deeply in the red as investors continued to flock to the sidelines in September amid fears over China, the Fed and Covid, with the pandemic set to become the most deadly outbreak in recent American history.
Top of the agenda for investors on Tuesday is the start of the U.S. Federal Reserve’s highly anticipated September meeting. Fed Chair Jerome Powell will hold a press conference Wednesday at the conclusion of the two-day meeting with investors looking out for any indications about the Fed’s tapering of its easy monetary policy.
Powell has said the tapering could occur this year but investors are waiting for more specifics, particularly after mixed economic data released since Powell’s last comments.
There are no major European earnings but Universal Music Group’s IPO is one to watch for on Tuesday. There are no major data releases in the region.