MARKET WRAPS

Watch For:

U.S. NAHB Housing Market Index.

Opening Call:

Stock futures fell Monday, pointing to an extension of recent losses on Wall Street as jitters in China's indebted property sector rippled into global markets.

The broad retreat came amid concerns over property developer China Evergrande Group. Market participants increasingly believe that Beijing will let Evergrande fail and inflict losses on its shareholders and bondholders. The company's debt burden is the biggest for any publicly traded real estate management or development company in the world.

Shares of Evergrande, which said Sept. 13 it was facing unprecedented difficulties, tumbled 12% in Hong Kong to their lowest level in a decade. The city's Hang Seng Index slid by 3.4%. Mainland Chinese markets were closed for a holiday.

A domestic bank loan repayment is due by Evergrande on Monday, with a 24-hour grace period, according to strategists at Deutsche Bank. Payments on domestic and dollar bonds are then due Thursday.

"Everyone is looking at Evergrande and saying 'has the time come for a major default in that area, and then the potential for contagion into the broader property sector?'" said Edward Park, chief investment officer at Brooks Macdonald. "It's an imminent risk now rather than being a theoretical risk as it has been for the past few years."

The concerns over Evergrande struck at a time when investors had already grown more cautious about the outlook for stocks, after a booming rally for much of the year.

Money managers have said valuations look elevated and pointed to signs that the economic recovery in the U.S. has lost steam amid the spread of the Delta variant of the coronavirus.

Other factors weighing on markets Monday included a natural-gas shortage in Europe that has prompted the U.K. government to hold emergency talks with energy suppliers, Mr. Park said.

The Federal Reserve will likely use its policy decision Wednesday to pave the way to pare back some of the stimulus it lavished on markets last year, he added.

Forex:

The dollar rose broadly ahead of a Fed meeting announcement Wednesday, when policy makers might say something regarding plans to taper asset purchases.

"The FX market starts a very busy week with a stronger USD across the board amid renewed expectations of a hawkish FOMC meeting outcome on Wednesday on the back of the series of stronger-than-expected economic data released in the past week," UniCredit said.

The Fed is very unlikely to provide details on the composition and pace of planned tapering, but should "leave little doubt" that these will be communicated in early November, the bank's analysts said.

The DXY index earlier hit a four-week high of 93.3620, while EUR/USD hit a four-week low of 1.1710, according to FactSet.

In currencies, the pound weakened 0.6% against the dollar to trade at $1.3670.

Bonds:

Yields on 10-year Treasury notes, slipped to 1.346% from 1.369% Friday.

Pimco has long expected the Federal Reserve to announce tapering plans at its December meeting but now it believes "there is a decent chance that they announce as early as November," said Tiffany Wilding, portfolio manager and US economist at the asset manager.

Still, because this coincides with the Treasury's so called debt ceiling "X-date", the date when Treasury will run out of funding, "we suspect the tapering decision will be delayed to the December meeting," she said.

Pimco has downgraded real GDP growth estimates since the July meeting, now expecting 3Q real GDP growth of 3% quarter-on-quarter compared with 6.5% originally expected.

European credit markets are likely to withstand a possible bond taper by the Fed and slower company earnings growth, says UniCredit.

This week's eurozone economic data is likely to show a slowdown in economic growth, despite remaining strong, which "might lead to a slowdown in the pace of corporate earnings growth over the months to come," analysts at the bank said.

This might keep markets nervous at a time when the Fed seems set to signal that it will possibly start tapering asset purchases by the end of the year. Yet European Central Bank bond purchases are helping to absorb the still high bond supply, which should limit the risks for euro-area rates and European credit, they said.

Commodities:

Oil prices were under pressure early in the week, with most equities indexes also in the red and the dollar making gains--a stronger U.S. currency makes dollar-denominated commodities like oil more expensive for other currency holders.

"For the remainder of the week, the market is likely to be influenced by further external factors, " said ING's Warren Patterson, with investors watching the meeting of the Fed later this week and soaring gas prices.

Gold wavered as investors look ahead to the Fed meeting for clues about the tapering timeline. The dollar and bond yields were creeping higher ahead of the meeting, keeping gold prices capped, Commerzbank said.

Investors will also be looking to see what the Fed says about interest rates, the bank says. "If Fed Chair Powell can convince the market that tapering will not be quickly followed by any rate hikes, gold could recover somewhat in the second half of the week," Commerzbank said.

Copper prices fell for a third consecutive day, as investors' worries about China's Evergrande mounted. Three-month copper on the LME dropped 1.9% to $9,090.50 a metric ton, adding to a 4% fall last week.

Aluminum also dropped 0.6% to $2,857.50 a ton while nickel slumped $18,835 a ton.

The woes of heavily indebted property giant Evergrande are hitting shares of the nation's property companies and sparking worries about the spillover impact from the company's potential collapse.

"Investors seem to be preparing for the inevitable collapse of the entire operation," said Malcolm Freeman, CEO of brokerage Kingdom Futures. "This has all proved too much for the metals which are all under attack," he said.

TODAY'S TOP HEADLINES

Chinese Property Sector Selloff Continues as Evergrande Worries Mount

Shares of Chinese property developers continued to slide Monday as worries mounted that China Evergrande Group is moving closer to a default, signaling the potential for a wider contagion in the sector.

The Hang Seng Mainland Properties Index plunged more than 6.0% on Monday morning, taking year-to-date losses to 33%. Evergrande fell 17% to HK$2.11, while Sunac China Holdings Ltd. slid 10% and Guangzhou R&F Properties Co. fell 7.3%. Property-management companies also tracked lower, with Country Garden Services Holdings Co. retreating 12%.

Read More ->

Shell to Start Making Lower-Carbon Jet Fuel as Regulations Loom

Royal Dutch Shell PLC is the first major oil company to announce targets for low-emission jet-fuel output and sales as airlines look to buy more of the fuel to meet climate-change goals and get ahead of proposed European Union regulations.

The Anglo-Dutch energy giant, a top provider of jet fuel, said it plans to produce 2 million metric tons of so-called sustainable aviation fuel a year by 2025, up from none today. It wants SAF to account for at least 10% of the jet fuel it sells by 2030, including fuel it sources from outside suppliers. A Shell spokesman declined to say how much SAF it sells now.

Read More ->

Investment Firms Tiedemann and Alvarium Near Deal to Merge, Go Public Via SPAC

Investment firms Tiedemann Group and Alvarium Investments Ltd. are close to a deal to merge and go public through a special-purpose acquisition company, people familiar with the matter said.

The combined investment firm would be called Alvarium Tiedemann Holdings and be valued at roughly $1.4 billion in the deal with the SPAC Cartesian Growth Corp., the people said. The merger could be announced as soon as this week.

Read More ->

Europe's OVHcloud Readies Possible $4.7 Billion IPO

European cloud-services provider OVHcloud plans to launch a possible initial public offering, the company said Monday, a deal that could value the business at more than $4.7 billion.

Based in Roubaix, France, OVHcloud rents computing, storage and networking capability to users, overseeing a network of dozens of data centers across North America, Europe, Singapore and Australia. It also operates its own fiber-optic network globally that the company claims gives it a competitive edge.

Read More ->

Workers End Strike at Mondelez International

Workers at Mondelez International Inc., maker of Oreo cookies, Wheat Thins and other snacks, have ended a weekslong strike as union members overwhelmingly accepted a new four-year contract.

The Chicago-based maker of Nabisco-brand crackers and other products said Saturday that employees, who were on strike at three of the four U.S. bakeries Mondelez owns, would resume work this week.

Read More ->

More CFOs Add Sustainability Targets to Corporate Loans

An increasing number of companies are tying the interest rates on their corporate loans to environmental and other sustainability targets as they face pressure from investors and regulators to go green.

Sustainability-linked loans carry interest rates that adjust based on whether a company meets a predetermined environmental, social or governance goal, such as reducing carbon emissions. U.S. companies took out $83.8 billion in such loans through Sep. 16, up from $2.5 billion during the same period in 2020, according to Dealogic, a data provider. U.S. corporate loan volume, including sustainability-linked loans, was $1.7 trillion as of Sep. 16, Dealogic said.

Read More ->

Chinese Property Sector Selloff Continues as Evergrande Worries Mount

Shares of Chinese property developers continued to slide Monday as worries mounted that China Evergrande Group is moving closer to a default, signaling the potential for a wider contagion in the sector.

The Hang Seng Mainland Properties Index plunged more than 6.0% on Monday morning, taking year-to-date losses to 33%. Evergrande fell 17% to HK$2.11, while Sunac China Holdings Ltd. slid 10% and Guangzhou R&F Properties Co. fell 7.3%. Property-management companies also tracked lower, with Country Garden Services Holdings Co. retreating 12%.

Read More ->

Economy Week Ahead: Central Banks, Home Sales, Purchasing Managers

The Federal Reserve's policy statement and Chairman Jerome Powell's press conference on Wednesday highlight this week's slate of economic news.

Read More ->

Democrats Press Ahead With Debt-Limit Vote Amid Standoff With GOP

WASHINGTON-A partisan fight over raising the government's borrowing limit is expected to ratchet up this week, with Democrats moving ahead with a vote in the face of strident GOP opposition, raising doubts about whether Congress will take action before the federal government runs out of cash.

The standoff has alarmed Wall Street analysts and business leaders, who in recent weeks have issued warnings about a rising risk of a technical default, in which the government might be unable to make all of its regular payments in full and on time. The threat of such a default could derail markets and hit U.S. economic growth.

Read More ->

Junk-Debt Sales Soar Toward Record Year

The $3 trillion market for low-rated companies' debt is having its best year ever, powered by a rebounding economy and investors' demand for any extra yield.

U.S. companies including Crocs Inc. and SeaWorld Entertainment Inc. have sold more than $786 billion of junk-rated bonds and loans so far in 2021, according to S&P Global Market Intelligence's S&P. That tops the previous high for a full year in data going back to 2008.

Read More ->

Covid-19 Vaccinations Boost the Global Economy, but May Not Cure It Alone

The global recovery is slowing as Covid-19 resurges, spurring governments to try to raise vaccination rates in hopes of fueling stronger economic growth.

The thinking is, first, that vaccinations will ease consumers' worries about infection, prompting them to spend more on travel, dining out, going to concerts and other activities that involve proximity to other people. Second, reduced Covid-19 case counts would mean fewer government shutdowns of ports, factories and other operations critical to global supply chains.

Read More ->

Natural-Gas Prices Surge, and Winter Is Still Months Away

Natural-gas prices have surged, prompting worries about winter shortages and forecasts for the most expensive fuel since frackers flooded the market more than a decade ago.

U.S. natural-gas futures ended Friday at $5.105 per million British thermal units. They were about half that six months ago and have leapt 17% this month.

Read More ->

FDA Advisory Panel Votes Against Endorsing Covid-19 Booster Shots Widely

An advisory panel to the Food and Drug Administration offered a limited endorsement of booster shots of the Covid-19 vaccine from Pfizer Inc. and BioNTech SE, recommending injections for people 65 and older or at high risk of severe disease but stopping short of justifying them for the broader population.

The outside panel's action comes as the dangerous Delta variant of the coronavirus continues to spread in the U.S. and federal health officials hope that additional doses of approved vaccines will sustain protection in people who have been previously vaccinated.

Read More ->

As Congress Debates Trillions in Spending, Voters' Minds Are Elsewhere

FORT WAYNE, Ind.-Sen. Todd Young warned the few dozen conservatives gathered this month in the basement of a sushi restaurant that their activism could be the only thing to stop Congress from spending trillions of dollars of tax money.

"You flooding the zone with your concerns will amplify for members just how serious they are," the Indiana Republican said.

Read More ->

Afghan Valley Legendary for Resisting Soviets, Taliban Empties Out

BAZARAK, Afghanistan-What's missing these days in the capital of Panjshir, the only Afghan province that resisted the Taliban after last month's fall of Kabul, are the Panjshiris.

Read More ->

Russia's Ruling Party Leading in Elections as Putin Looks to Tighten Grip

MOSCOW-Russia's ruling party appeared on course to maintain its majority in parliament, preliminary results showed, in an outcome that would cement President Vladimir Putin's control over his country's main levers of power.

The initial tally showed pro-Kremlin United Russia won 50% of votes cast, followed by the Communist Party of the Russian Federation with 20% and the Liberal Democratic Party of Russia with around 8%, according to early results from Russia's electoral commission based on 85% of the ballots counted.

Read More ->

Health Experts Urge Patience on Wider Use of Covid-19 Booster Shots

WASHINGTON-Top U.S. health officials urged patience on broader approval for booster shots for the coronavirus vaccine, two days after a Food and Drug Administration advisory panel recommended that a booster from Pfizer Inc. and BioNTech SE should be limited to the elderly and other groups at higher risk.

"Ultimately, the real, proper regimen will turn out to be the original two shots plus a boost," said Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said on NBC's "Meet the Press" Sunday. He said officials' highest priority is to vaccinate unvaccinated Americans.

Read More ->

U.S. Spat With France Shows Challenge of Keeping Allies Unified

France stepped up its opposition to a security agreement the U.S. crafted with Australia and the U.K., criticizing the Biden administration's failure to keep its allies apprised of sweeping foreign policy initiatives after the pact led to the loss of a lucrative French submarine deal.

On Sunday, French Foreign Minister Jean-Yves Le Drian discussed "the strategic consequences of the current crisis" with its ambassadors from the U.S. and Australia who were recalled for consultations. French President Emmanuel Macron is also expected to speak in the coming days with President Biden, officials from both countries say, in a sign of the depth of France's frustration over the security pact. Mr. Le Drian likened French anger over the security pact to the blowback from American allies over the Biden administration's abrupt and messy withdrawal from Afghanistan.

Read More ->

U.N. General Assembly Faces Climate Change, Covid-19 and New Tensions

WASHINGTON-World leaders gathering this week for an annual United Nations meeting will confront persisting global problems such as Covid-19 and climate change, while grappling with new tensions and conflicts dividing U.N. members.

Diplomats and leaders attending the U.N. General Assembly in New York will also contend with the return to power of the Taliban and the humanitarian situation in Afghanistan, as well as the challenge posed by Iran under a new, hard-line president, Ebrahim Raisi.

Read More ->

Immigration Measure Can't Be Included in $3.5 Trillion Package, Senate Parliamentarian Says

WASHINGTON-The arbiter of Senate procedural rules said Sunday that Democrats' plan to provide a pathway to citizenship for millions of immigrants living in the country illegally couldn't be included in a wide-ranging $3.5 trillion proposal expanding the safety net and responding to climate change.

The decision from the office of Senate parliamentarian Elizabeth MacDonough said that the plan to legalize a group including young immigrants, farmworkers, essential workers and those living in the U.S. on humanitarian grounds didn't comply with the chamber's rules.

Read More ->

Write to sarka.halas@wsj.com

TODAY IN CANADA

Earnings:

Nothing major scheduled

Economic Indicators (ET):

N/A Canada parliamentary elections

Stocks to Watch:

No items published

Other News:

U.S.-Canada Border Rules Leave Travelers Confused, Discouraged

William Thompson was hoping to be in the French-speaking province of Quebec in October, soaking up the autumn colors in communities made famous by one of his favorite authors, Canadian murder-mystery writer Louise Penny.

Since Aug. 9, fully vaccinated Americans like Mr. Thompson have been allowed to enter the country for leisure and tourism if they comply with a series of additional requirements. But before his trip he became so flummoxed by those rules that he gave up, becoming one of the many would-be travelers across the world's longest shared land border who say they are canceling or postponing their plans.

"I felt defeated," he said.

While traffic into Canada picked up in the weeks after officials reopened the border to fully vaccinated Americans, it remains much lower than it was before the pandemic. During the week that ended Sept. 5, the total number of people entering Canada on flights and in noncommercial vehicles was about one-fifth of its pre-pandemic level.

There are hurdles for travelers in both directions: Canada's requirements that all visitors obtain a molecular Covid-19 test and provide information about their backup quarantine plans have deterred some prospective visitors. At the same time, many Canadians said they are baffled by U.S. rules that allow them to fly into the country with a negative Covid-19 test but prevent them from driving across the land border unless they are traveling for an essential reason.

Business groups have called for the U.S. to open its land border for nonessential Canadian travelers who are fully vaccinated, and they would like both countries to eventually ease pretravel testing rules for vaccinated people, saying the current requirements are hurting businesses and communities on both sides of the border.

Market Talk:

No items published

Expected Major Events for Monday

06:00/GER: Aug PPI

10:00/UK: Aug Aluminium Production report

14:00/US: Sep NAHB Housing Market Index

All times in GMT. Powered by Kantar Media and Dow Jones.

Expected Earnings for Monday

Adamis Pharmaceuticals Corp (ADMP) is expected to report $-0.04 for 2Q.

Coda Octopus Group Inc (CODA) is expected to report for 3Q.

Cognyte Software Ltd (CGNT) is expected to report for 2Q.

EVI Industries Inc (EVI) is expected to report for 4Q.

Ennis Inc (EBF) is expected to report for 2Q.

Espey Manufacturing & Electronics Corp (ESP) is expected to report for 4Q.

Lennar Corp - A Share (LEN,LENB) is expected to report $3.27 for 3Q.

Natural Alternatives International Inc (NAII) is expected to report for 4Q.

Ocean Power Technologies Inc (OPTT) is expected to report for 1Q.

Perpetua Resources Corp (PPTA.T) is expected to report for 3Q.

Pioneer Bancorp Inc (PBFS) is expected to report for 4Q.

Virco Manufacturing Corp (VIRC) is expected to report for 2Q.

Powered by Kantar Media and Dow Jones.

ANALYST RATINGS ACTIONS

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

September 20, 2021 06:10 ET (10:10 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.