In the U.S, futures rose after the S&P 500 fell the most since May with concerns over the debt-ceiling impasse in Washington adding to investor angst. The Nasdaq 100 tumbled the most since March as technology shares fared worse amid rising Treasury yields. The benchmark S&P 500 is down 3.8% so far this month and on pace for its first monthly loss since January after it gained nearly 16% since the beginning of 2021. The S&P 500 index SPX fell 2%, its worst drop since May, and the tech-heavy Nasdaq COMP, -fell 2.8%, its worst drop since March.
The Fed indicated it may start raising its benchmark interest rate sometime next year and will likely begin cutting back the pace of its monthly bond purchases before the end of this year. During a Senate hearing, Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen both warned that a U.S. default due to a failure to raise the debt ceiling would have catastrophic consequences. Republicans blocked a Democratic move in the Senate to raise the debt limit. Heated remarks from Senator Elizabeth Warren also weighed on markets. After slamming Powell on his track record over financial regulation, Warren said he’s a “dangerous man to head up the Fed” and that’s why she’ll oppose his renomination.
Asian stocks did decline on Wednesday as rising bond yields carried fears about inflation and the intensifying debt crisis surrounding China Evergrande Group’s debt. The MSCI Inc.’s gauge of Asian stocks had the biggest drop in almost six weeks and may be heading for its first quarterly slide in six. Tokyo’s Nikkei 225 NIK sank 2% to 29,558, the Shanghai Composite index SHCOMP did shed 1.8% to close at 3,537. It is also worth noting that Hong Kong’s Hang Seng index HIS saw a modest 0.5% decline, to 24,389 after troubled property developer Evergrande Group said it was selling a stake in Shengjing Bank for 9.9 billion yuan ($1.5 billion) — a step toward addressing its cash crunch.
Oil prices fell on Wednesday after U.S. crude inventories unexpectedly rose as doubts over demand resurfaced, with COVID-19 cases continuing to increase worldwide and some regions facing gasoline shortages. Brent crude was down $1.34, or 1.7%, at $77.75 a barrel by 0706 GMT. On Tuesday, it fell nearly $2 after touching its highest in almost three years at $80.75. U.S. oil prices dropped $1.38, or 1.8%, to $73.91, having fallen 0.2% in the previous session. Oil prices have been charging higher as economies recover from pandemic lockdowns and fuel demand picks up, while some producing countries have seen supply disruptions.
New data has come to light showing that Zambia’s debt to Chinese public and private lenders is $6.6 billion, almost double the amount disclosed by the previous Zambian government, the China Africa Research Initiative (CARI) has estimated from an analysis of loan data. The copper rich nation became Africa’s first coronavirus-era sovereign default last November and its ongoing debt restructuring has become a test case of Western multilateral efforts to get countries to disclose their full borrowings. The previous government, led by Edgar Lungu, said Zambia’s Chinese debts stood at $3.4 billion but the estimate published by CARI on Tuesday chimes with comments from President Hakainde Hichilema, who took office last month, that the debt load is likely to be higher. The finance ministry did say its official figures were “broadly consistent” with the CARI estimate, adding that the government’s reporting on public debt was accurate and transparent. The $6.6 billion figure is based on data collected by CARI at the Johns Hopkins University School of Advanced International Studies. It does not include penalties or interest arrears that continue to build up.