European shares recovered some equilibrium Tuesday, following the previous session's heavy losses.

Investors fretted in the last trading session over the implications of the potential failure of China Evergrande-the world's most indebted property developer.

Fears over what could come out of the looming collapse of Evergrande continue to make markets uneasy, but investors will have to wait until Wednesday, when Chinese exchanges come back online, to see the next major update.

"Even if the Evergrande case has sparked a wave of market fear, especially with traders worried that the consequences could spread to other countries, most investors now seem confident the PBoC will keep on providing support and inject cash to mitigate the global risk," ActivTrades analyst Pierre Veyret said. "Investors are still looking towards the Fed, anticipating a new tapering groundwork."

Investors are closely watching the Federal for clues as to how and when the central bank will begin slowing, or tapering, its Covid-19 pandemic-era program of monthly asset purchases, which add liquidity to markets.

Indications that a taper will come sooner rather than later could cause markets to wobble even more in the current environment, as broader fears persist.

"The market rout we're seeing is reflecting a wider set of risks than just Chinese property, and comes after increasing questions have been asked about whether current valuations could still be justified, with talk of a potential correction picking up," said Jim Reid, a strategist at Deutsche Bank.

Airlines, miners and oil stocks were among the biggest pan-European risers Tuesday.

Shares on the move:

Shares of Vivendi fell 13% after the spin-off and listing of Universal Music Group, for years its crown jewel that accounted for the lion's share of revenue growth.

Vivendi distributed a 59.87% stake in Universal as a special dividend to shareholders, leaving it with a 10.13% holding in the record label. The distribution will leave Vivendi with pay-TV business Canal+ Group, ad-holding firm Havas and publishing company Editis as its main businesses.


Shares in Stagecoach jumped more than 20% after the bus company said it was in talks about an all-share takeover by rival National Express. Its shares also rose 8.2%.

Competition authorities might have something to say about the two public-transport operators coming together, but otherwise the deal looks fairly sensible, AJ Bell said. "A key factor to consider is whether someone else might fancy owning Stagecoach, such as an overseas transport operator. It's not an easy feat to build up a large position in the U.K. public-transport market and Stagecoach now has 8,400 buses and coaches," Bell's investment director Russ Mould said.


Sixt stock extended its advance, rising another 2.2% after Monday's 7% gain. This after the German car-rental company had raised its forecast for the current year as the development of the summer vacation in Europe and the U.S. was better than it had initially planned for.

Third-quarter revenue at the German car-rental company is expected at EUR741 million, M.M. Warburg said, which would mark a 60% increase compared with 2020 but would still be slightly lower than the same quarter in 2019. There could be further upside to 2021 estimates, however, and the recent lifting of U.S. restrictions on vaccinated travelers from Europe could further support Sixt's fourth-quarter performance.

U.S. Markets:

Wall Street was set for a cautious recovery, in line with global stocks that rose, with Wednesday's Fed announcement seen as key.

"We are at a pivot point: we are moving away from maximum policy accommodation and at the same time the V-shaped recovery is over and it poses some real questions about what is next," said David Donabedian, chief investment officer at CIBC Private Wealth. "We have had a great run but it is going to get tougher from here, with lower returns and more volatility."


EUR/USD was largely flat, having fallen to a four-week low of 1.1701 on Monday, with the prospect the Fed will taper asset purchases in coming months having boosted the dollar recently.

Carlo Alberto De Casa, market analyst at Kinesis, said the European Central Bank's own "small tapering" has limited the euro falls. The ECB said earlier this month that pandemic-related asset purchases would continue at a moderately lower pace. This "is in some way helping the euro," De Casa said.

The Swedish krona edged lower, cutting earlier gains, after the Riksbank kept interest rates at zero percent and said it expects to keep rates at that level for the entire forecast period until the third quarter of 2024. However, moves were limited as most analysts had expected this, although they had said there was a small possibility of the Riksbank adding a rate increase into its rate-path forecast following recent strong inflation data for August.

The Riksbank revised up its inflation forecast, with inflation expected to be higher than 2% in the coming year before falling back later. It will continue to purchase securities in 2021 and forecasts that the holdings will be "more or less unchanged in 2022."


JPMorgan remains constructive on intra-eurozone government bond spreads.

"We remain convinced that for intra-EMU spreads the path of least resistance over the coming weeks is towards tighter spreads given our expectation of intensifying search-for-yield dynamics in a low volatility environment in the near-term," said strategists Aditya Chordia and Elisabetta Ferrara.

Near-term positive spread catalysts include favorable supply versus ECB purchase dynamics for the remainder of 2021, limited political noise over the next one to two months and still light investor positioning in intra-eurozone.

The JPMorgan strategists remain "broadly constructive" on Greece, and expect the country to come to the bond market one more time this year, likely with a syndicated tap for around EUR2 billion in the fourth quarter.

Their view is fuelled by attractive valuations, favorable supply versus ECB purchase dynamics, constructive macro outlook and stable political landscape. Even after the recent relative outperformance, the 10-year Greek-German spread trades around 15 basis points away from the tight levels reached over the summer, the strategists said, expecting it to return to these levels over coming weeks.

Rates markets are expected to give a relatively muted response to the coming German elections, TD Securities said.

"Recent polling suggests that markets are well-prepared to see a transformation within the German government, with the SPD [Social Democratic Party] polling ahead of the CDU/CSU [Christian Democratic Union/Christian Social Union]," TD Securities said.

The reaction of bond markets has been close to muted to incoming polls. A government led by SPD chancellor candidate Olaf Scholz is likely to experience the continuation of the current fiscal policy, TD Securities said, expecting other drivers near term. "In the near term, we expect the EUR rates reaction will be driven by the recalibration of the ECB's policy at the December meeting."

The U.K. government is likely to scale back fiscal stimulus in autumn, despite official data showing public finances have improved, Capital Economics said.

"August's public finance figures provided more evidence that the government's financial position isn't as bad as the Office for Budget Responsibility predicted back in March," senior U.K. economist Ruth Gregory said.

The GBP20.5 billion of public sector net borrowing in August was once again lower than the OBR's forecast of GBP21.6 billion, though it was higher than the a forecast in a WSJ pool of GBP14.0 billion. U.K.'s Treasury chief expected to signal the end of pandemic-era stimulus at his Budget on Oct. 27, when he presents the government's fiscal plans.


Crude futures rebounded as part a broader market rally, said ING, with Shell's confirmation that some of its Gulf of Mexico capacity shut down by Hurricane Ida may remain offline for some time, supporting oil's gains.

Meanwhile, European gas storage is at about 72% capacity compared with a 5-year average of 88%, ING's Warren Patterson said. "The tightness in the European market suggests that prices are likely to remain elevated, as well as volatile."

Gold ticked higher but has continued to trade in a narrow range this week. "The firm dollar, coupled with expectations of the Fed, appears to have been keeping the gold price in check," Commerzbank's metals analyst Daniel Briesemann said.

Copper prices rose 1.5% on the LME, recovering some of Monday's losses, but market participants remain concerned about the ramifications of an Evergrande default.

"Markets are still waiting for clarity [on] how Evergrande will be able to manage its $300 billion of liabilities," Anna Stablum, at brokerage Marex, said.

Separately, the International Copper Study Group said the global refined copper market had a 90,000-ton deficit in June compared with a 4,000 ton surplus the previous month.



OECD Expects Delta Variant to Slow, But Not Derail, Global Economic Recovery

The fast-spreading Delta variant of Covid-19 has slowed the pace of the global economic recovery, but won't derail it, according to new forecasts released by the Organization for Economic Co-operation and Development on Tuesday.

In its latest quarterly report on the economic outlook, the Paris-based research body lowered its growth forecasts for the global and U.S. economies in 2021, the first downgrade since December last year, when new infections were surging.


Universal Music Shares Soar in Market Debut

Shares of Universal Music Group NV-behind stars including Taylor Swift, Drake and the Beatles-surged in their trading debut, a strong vote of confidence from investors in continued growth in the music industry.

In early trading, the company's stock rose 38% above the reference price of 18.50 euros, set Monday evening by the Euronext exchange in Amsterdam. At the current price, the world's largest music company, which is being spun off from French media conglomerate Vivendi SE, has a valuation of more than EUR45 billion, equivalent to $52.75 billion.


Shell to Sell Permian Assets to ConocoPhillips for $9.5 Billion

Royal Dutch Shell PLC has agreed to sell all of its assets in the Permian basin, the most active U.S. oil field, to ConocoPhillips for around $9.5 billion in cash.

The deal, disclosed by both companies on Monday, comes as Shell is attempting to cut its carbon emissions and invest more in renewable energy. The sale is one of the largest recent transactions in the shale patch as large oil companies come under increasing pressure to diversify outside of fossil fuels.


Credit Suisse's Archegos Disaster Exposes Cracks in Bank Regulation

When Archegos Capital Management blew up, it saddled Credit Suisse Group AG with $5.5 billion in losses. One reason investors and regulators were blindsided: a gap in the regulatory oversight of big international banks.

That is the conclusion of financial risk consultants who have sifted through the wreckage.


Stagecoach Is in Merger Talks With National Express Group

U.K. transportation group Stagecoach Group PLC said Tuesday that it is in talks for an all-share takeover by peer National Express Group PLC that will give its shareholders about 25% of the combined group if the deal proceeds.

Under any takeover, Stagecoach shareholders will get 0.36 new National Express ordinary shares for each Stagecoach ordinary share held.


Kingfisher 1H Adjusted Pretax Profit Rose, Came in Ahead of Market Views

Kingfisher PLC on Tuesday reported an expectations-beating jump in adjusted pretax profit for the first half of fiscal 2022, boosted by strong demand for home improvement, and said its outlook for the full year has improved.

The home-improvement retailer posted a pretax profit of 677 million pounds ($924.65 million) for the six months ended July 31, compared with GBP398 million for the same period a year earlier. Adjusted pretax profit came in at GBP669 million, ahead of the company-compiled market estimate of GBP657 million.


Compass Group Says 4Q Underlying Revenue to Be 86% of FY 2019's

Compass Group PLC said Tuesday that it expects fourth-quarter underlying revenue on a constant currency basis to improve to 86% of 2019 revenue, and for it to be slightly ahead of the previous guidance range of 80% to 85%.

The U.K. catering contractor said although it expects most of its sectors to continue performing well, it remained cautious about its Business & Industry segment given the continuing uncertainty surrounding the pace of office reopenings in its major markets.


AstraZeneca to Build $360 Mln Manufacturing Plant in Dublin

AstraZeneca PLC said Tuesday that it will invest $360 million in a manufacturing facility in Ireland.

The pharmaceutical company said it is planning to build an active pharmaceutical ingredient-manufacturing facility for small molecules near Dublin to ensure that its supply network is fit for future growth.


Surging Energy Prices Push U.K. to Weigh Helping Hard-Hit Industries

LONDON-The U.K. government is considering measures to soften the fallout from a sharp increase in energy prices that has put power suppliers to consumers out of business and stoked problems for a range of industries from steel to brewing and fertilizers.

Natural-gas prices across Europe have surged as economies bounce back from the pandemic at a time when stores of the fuel are low and Asian demand is strong.


Glasgow Climate Summit Faces 'High Risk of Failure,' U.N. Leader Says

NEW YORK-The coming climate summit in Glasgow, Scotland, runs a "high risk of failure" unless world leaders take stronger measures to stem greenhouse-gas emissions, United Nations Secretary-General António Guterres said Monday.

Mr. Guterres made his comments to reporters following a two-hour closed session with U.K. Prime Minister Boris Johnson, U.S. climate envoy John Kerry and other leaders on the sidelines of the U.N. General Assembly meeting.


Pfizer, BioNTech Say Covid-19 Vaccine Is Safe for Children Aged 5 to 11

Pfizer Inc. and partner BioNTech SE said their Covid-19 vaccine was found to be safe in children ages 5 to 11 years in a late-stage study and generated a strong immune response in them, bringing the prospect of broader vaccination coverage closer.

Pfizer said it would share the results with regulators in the U.S. and other countries and seek emergency use authorization in the U.S. as early as the end of the month.


Flying Taxis' Best Ride Is to the Helicopter Market

Cabdrivers don't need to worry about being replaced by flying cars. Helicopter makers might need to a little bit.

Vertical Aerospace, a British startup devoted to the development of electric vertical-takeoff-and-landing vehicles, or eVTOL, has just received a preorder for 25 aircraft plus an option for 25 more from Bristow Group, a U.S.-owned operator of civil helicopters, the air-taxi company told The Wall Street Journal.



Powell's Taper Tightrope Could Be Complicated by Fed 'Dots'

Federal Reserve Chairman Jerome Powell faces the risk of another dot dilemma this week.

Mr. Powell has stressed in public remarks that the Fed's decision about when to slow its bond buying shouldn't fuel inferences about officials' intentions to lift rates.


U.S. Stock-Market Tumble Hasn't Quelled Optimism

U.S. stocks are facing their most uncertain outlook since the Covid-19 pandemic sent the market tumbling last year. But many investors say there is no better place to be right now.

Major U.S. stock indexes sank Monday, with the Dow Jones Industrial Average losing more than 600 points, or 1.8%, as concerns grew that a default by real-estate developer China Evergrande Group could spur a widespread retreat from riskier assets. Percolating worries about a slowdown in economic growth, ongoing supply-chain issues and rising deaths tied to the Delta variant of the coronavirus added to the volatility.


China Evergrande Fallout Hits Western Bond Funds

The potential default of real-estate developer China Evergrande Group is taking a toll on funds in Europe and the U.S. that chased high yields in the Chinese corporate bond market.

Concerns that Evergrande might not pay its bonds this month triggered selling of other companies in the country's property sector, weighing down funds managed by Ashmore Group, BlackRock Inc. and Pacific Investment Management Co., among others.


Retailers Navigate Freight Costs, Scarce Inventory and Uncertain Future

Finance executives in the retail industry continue to face a multitude of challenges as they plan for the fall and the holiday season despite being generally optimistic on their companies' earnings outlook.

Retailers are grappling with ongoing supply-chain disruptions that are keeping inventory low and often causing delays, forcing companies to pay premiums to accelerate shipments. Deliveries from Vietnam and other Southeast Asian countries have slowed as local governments limit factories' production capacity due to the Delta variant, potentially resulting in delays and shortages of certain products. Companies say they are experiencing a level of uncertainty not seen since the onset of the pandemic, putting their financial plans in doubt.


Why Container Ships Can't Sail Around the California Ports Bottleneck

There appears to be no sailing around the breathtaking backup of container ships off the jammed ports of Los Angeles and Long Beach.

Newly-arriving vessels are adding to a record-breaking flotilla waiting to unload cargo that on Sunday reached 73 ships, according to the Marine Exchange of Southern California, nearly double the number a month ago and expanding a fleet that has become a stark sign of the disruptions and delays roiling global supply chains.


Democrats Add Debt Limit to Spending Measure, Sparking Showdown With GOP

WASHINGTON-Democratic leaders said Monday they would attach a suspension of the debt limit through December 2022 to a short-term spending bill, setting up a clash with Republicans over preventing both a partial government shutdown and a potential default on U.S. debt.

The House is expected to vote on the combined measure this week, but GOP opposition in the Senate cast uncertainty over how and when lawmakers will act to prevent the federal government from running out of cash. Many Republicans said Monday they wouldn't supply any votes for an effort to raise the government's borrowing limit in protest to Democrats' plans to move trillions of dollars in new spending through Congress.


Bitcoin Price Slides as China Jitters Hit Crypto Markets

Bitcoin fell sharply on Monday as a wave of selling triggered by tumult in China's indebted property sector hit the crypto markets.

The world's largest cryptocurrency was trading at about $43,489 at 5 p.m. ET, down 8.6% from Friday, according to CoinDesk.


Biden to Stress Importance of Alliances in U.N. Speech

WASHINGTON-President Biden will outline a U.S. foreign-policy vision rooted in diplomacy and global alliances during his first address to the United Nations as commander-in-chief, calling for a shift away from armed conflict after two decades of war.

At a moment when some U.S. alliances are facing strain, Mr. Biden is expected to make the case that the biggest issues facing the world-from the coronavirus pandemic to climate change-can only be solved with cooperation among countries with varying national interests, according to U.S. officials. He'll encourage competition among rising powers but make clear that he doesn't want another Cold War, the officials said.


U.S. Pledge to Vaccinate Poor Countries Stutters Amid Logistical Challenges

A White House plan to donate hundreds of millions of doses of Covid-19 vaccines has been hampered in many developing countries by a lack of infrastructure to handle storage and distribution, leaving poorer nations far behind the developed world in vaccination rates.

After a delayed start-the U.S. missed its first donation target-the Biden administration has been ramping up overseas donations, shipping around 137 million doses, most of them Moderna Inc. and Johnson & Johnson. It expects to send 500 million doses of a shot developed by Pfizer Inc. and BioNTech SE by the end of June 2022, the largest donation total of any country.


U.S. Covid-19 Death Toll Surpasses 1918 Flu Fatalities

The number of known Covid-19 deaths in the U.S. has surpassed the country's fatalities from the 1918-19 flu pandemic.

The U.S. on Monday crossed the threshold of 675,000 reported Covid-19 deaths, according to Johns Hopkins University, which tracks data from state health authorities. The Centers for Disease Control and Prevention estimates the influenza pandemic killed about that many people in the U.S. a century ago, in 1918 and 1919. Both figures are likely undercounts, epidemiologists and historians say.


Canada's Justin Trudeau Headed for Victory in National Vote

OTTAWA-Canadian Prime Minister Justin Trudeau was headed toward a third straight electoral victory Tuesday morning, although his bet that a snap vote would help him secure a majority government failed to materialize.

Both Canada's CTV Network and the Canadian Broadcasting Corp. projected the incumbent Liberal Party was set to win enough seats in parliament to form a minority government.


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(END) Dow Jones Newswires

September 21, 2021 06:22 ET (10:22 GMT)

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