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US markets have tumbled amid growing concerns about China's financial system and the impact of coronavirus on the global economy.

On Wednesday, the Dow Jones index lost almost 800 points to 33,816.92 before regaining ground.

There were similar falls in Europe, with the Germany's Dax index losing 2.3%, and France's Cac 40 down 1.7%.

One analyst called it "a classic flight to safety", with Wall Street seeing its worst day since May.

But US stocks are still up more than 12% this year and some analysts played down fears of a correction ahead.

Monday's sell-off was primarily driven by concerns that Evergrande – one of China's biggest property developers – is struggling to repay around $300bn of debts.

  • Embattled China property giant sparks economy fears

Regulators in China warned it could spark broader risks to the country's financial system. And investors fear this could hit big banks exposed to Evergrande and companies like it, causing contagion in global markets.

'Overspill'

"The fear of an Evergrande bankruptcy appears to be leading to concern about China's very own Lehman [Brothers] moment, and a big overspill across the region," said Michael Hewson of CMC Markets.

Investors are also nervous that the US Federal Reserve, which meets on Tuesday and Wednesday, will confirm plans to pare back its support for the US economy this year.

Global stocks have rallied as economies have reopened and central banks have provided trillions of dollars in support to boost growth.

But there are concerns there could be a pull-back, if support is taken away at a time when the Delta variant is starting to drag on the recovery.

Strategists at Morgan Stanley said they expected a 10% correction in America's S&P 500 index as the Fed starts to unwind its support. They added that signs of a stalling recovery could deepen that fall to 20%.

'Signal from the noise'

However, other analysts played down fears of a rout, noting that September is typically a bad months for stocks.

"Overall, September continues to live up to its bad reputation as historically the weakest month of the year. But that doesn't mean it can't rebound," said JJ Kinahan, chief market strategist at TD Ameritrade.

And Lindsey Bell of Ally Invest said any pullback may be short-lived.

"Much of investing is about sorting through what's signal and what's noise," she said. "While there is concern about the Evergrande situation infecting global markets, for the long-term investor, this situation may just be noise."