Global Markets – Global stocks fall on concerns about China, US taxes and central bank policy
* Rewrite the top, update prices, add US open market, change title, points, date line and minor line, previously in London
* US 10-year Treasury yield touches two-month high
*Evergrande is down 30% this week
The dollar rose to its highest level in 3 weeks
NEW YORK (Reuters) – Global stocks fell on Friday, weighed by concerns about China markets, the possibility of a US corporate tax hike and updates on the US Federal Reserve’s lower strategy next week.
The US 10-year Treasury yield rose to touch a two-month high in early US trade, and the dollar touched a three-week high.
The MSCI Worldwide Stock Index fell 0.58%, the Pan-European STOXX 600 Index lost 0.82%, while the broader MSCI Asia Pacific Index of stocks outside Japan closed 0.13% higher.
Shares of property developer China Evergrande, which has 2 trillion yuan ($310 billion) in commitments and faces an $80 million bond coupon payment next week, fell 30% this week.
The editor-in-chief of China’s state-backed Global Times warned that it should not bet on a government bailout on the assumption that it is “too big to fail”.
“The primary risk to the markets is if Evergrande is not bailed out by the Chinese government,” said Giles Coghlan, chief currency strategist at HYCM, although he added, “I don’t think Evergrande is a Lehman scenario — it wouldn’t be a massive systemic risk.”
In the US, concerns have grown that a possible increase in corporate taxes could affect earnings as top Democrats and President Joe Biden sought to raise the highest corporate tax rate to 26.5% from the current 21%.
The Federal Reserve, facing a labor market that may be stalled or on the cusp of a rally, is expected to open the door next week to reduce its monthly bond purchases while tying any actual change to US job growth in September and beyond.
“Historically, the Fed waits for data to take a course of action,” said Wade Guenter, partner at Wilshire Phoenix. “We’ve seen a few months of high inflation data, (and now) we’re waiting for a response.”
The Dow Jones Industrial Average fell 181 points, or 0.52%, to 34,570.32, the Standard & Poor’s 500 lost 33.95 points, or 0.76%, to 4,439.8 points, and the Nasdaq Composite fell 153.32 points, or 1.01%, to 15,028.61.
Stock market prices were expected to fluctuate on Friday due to the “magic four” day, when four different futures and options contracts expire.
The yield on the standard 10-year Treasury bond was 1.3753%.
The yield on German 10-year government bonds, the benchmark for the euro zone, was -0.280% after rising as much as 3.5 basis points to a two-month high of -0.277%, after a Financial Times report indicated that the European Central Bank. The bank expects to reach its 2% inflation target by 2025.
Stronger-than-expected US retail sales data on Thursday boosted the dollar, which held steady near the previous day’s three-week high against the currency index.
The dollar index, a measure of the value of the US currency against six major currencies, rose to 93.094, the highest level since late August. The latest rise was 0.29%.
The euro fell 0.26% to $1.1733.
Gold was trading at $1,753 an ounce, and US gold futures were down 0.12% to $1,752.50 an ounce.
US crude recently fell 1.32% to $71.65 a barrel, and Brent crude was at $74.89, down 1.03% on the day.
(Reporting by Elizabeth Dilts Marshall) Editing by Andrew Heavens