Risk rally likely as stocks improve after Evergrande relief

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However, anticipation that the US Fed may move a step closer to tapering later on Wednesday has kept a lid on gains and the mood

Investors look at computer screens showing stock information in Shanghai, China. Picture: REUTERS/ALY SONG

Markets in Taiwan and China reopened lower after a two-day break, catching up with a sharp selloff around the world triggered by concern over Evergrande’s predicament, but were soon paring losses as the payment promise buoyed the mood. Evergrande is still due to pay $83.5m in interest on a separate dollar bond, but the signal that it has at least some ready cash for creditors seems to have cheered investors.

Overnight on Wall Street the S&P 500 fared little worse than flat, to sit about 4% below a record peak made early in September. “As a consequence, Evergrande can perhaps be seen not so much as a potential crisis trigger but rather a symptom of a broader policy shift which threatens Chinese growth as politics dominate economic considerations.”

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