European stocks rose as concerns over giant property developer China Evergrande Group eased and ahead of the U.S. Federal Reserve interest-rate decision later.

China's Shanghai Composite reopened after a holiday to muted gains, closing up 0.4%. Markets in Hong Kong were closed for a holiday Wednesday. Hong Kong's Hang Seng Index sold off earlier this week alongside broader markets as investors feared that defaults from one of China's biggest developers could create contagion risks in the broader market.

An onshore unit of Evergrande said Wednesday it would make an interest payment on time this week, though the debt-ridden conglomerate is seen missing a separate payment due on dollar bonds. Investors expect the Chinese government will step in to stave off ripple effects that could affect the country's growth and weigh on the global economic recovery.

"We don't know yet what that attempt to limit contagion is going to be, but the market does expect that Beijing will act," said Susannah Streeter, senior investment and markets analyst at U.K. asset manager and stockbroker Hargreaves Lansdown.

Shares on the move:

Mining, financial and oil stocks advance while gaming shares rise following an improved offer for Entain from DraftKings.

Data in focus:

Following drop in purchasing managers indexes across Europe in August, early surveys and most high-frequency data point to a further moderation in growth momentum across the continent, Goldman Sachs said.

The bank forecasts the PMIs declining again in September, with the eurozone composite PMI falling to 57.4 from 59.0 in August.

Moroever, Goldman Sachs expects the composite PMI for the U.K. to fall to 53.8 in September from 54.8 in August. "Despite these projected declines, we expect the PMIs to remain well in expansionary territory, consistent with our forecast of continued firm growth across Europe and the robust forward-looking subcomponents of the PMIs," Goldman Sachs said.

PMIs for the eurozone and the U.K. will be published Thursday.

With no single party holding a convincing lead, the next German government will probably be a three-party coalition for the first time since the early post-war years, UBS economists Dean Turner and Maximilian Kunkel said.

For investors, key areas to focus on are climate change, digitalization, fiscal policy and appetite for further European Union integration, the economists said.

"Most of the major political parties have pledged to deliver more in these areas, particularly the first two," UBS said.

However, the full extent of any changes won't be known until collation negotiations are complete, the economists added.

U.S. Markets:

Stock futures rose as investors awaited a policy update from the Fed.

Investors are awaiting an update to the Fed's monetary policy and economic projections. Officials are due to release a statement at 2 p.m. ET, followed by a press conference.

Expectations that Fed Chairman Jerome Powell could use the occasion to mark the scaling back of the pace of bond purchases this year have waned due to Evergrande fears and concerns over the pace of the U.S. labor market recovery, money managers say.

Investors expect that any such reduction would be extremely gradual.

"Today it's a bit of a wait-and-see mode in terms of what the Federal Reserve will do," Ms. Streeter said.

"With Evergrande, there are concerns over what might happen with the global economy so there's some expectation that officials will take their foot off the pedal very slowly."


The dollar's reaction to the Fed's policy statement will likely depend on the interest-rate outlook, given it is widely expected that the central bank will signal a decision on tapering asset purchases will be made in November or December, Commerzbank said.

Fed projections that point to rate increases starting earlier "would certainly be dollar positive," said strategist You-Na Park-Heger.

However, recent weaker economic data would justify caution and the Fed may try to dampen rate-rise expectations, she said.

"Today's Fed meeting might not provide any new impetus as far as EUR/USD is concerned, and it is possible that USD bulls will be disappointed," she said. A surprise failure to signal tapering would "constitute a bitter disappointment" and the dollar would weaken, she added.

The dollar should stay supported by safe-haven demand even if the Fed is more cautious about prospects for tapering asset purchases than some expect, UniCredit said.

The dollar "is enjoying renewed support due to its safe-haven status" and concerns over China are likely to ensure trade in major currencies remains nervous, it said. This may help offset any "broad-based downward correction" it would otherwise suffer if the Fed doesn't "sound as hawkish as some in the market expect."

Although an upward revision to interest-rate projections would be positive, the Fed will likely stress tapering will be gradual and won't necessarily herald rate increases, UniCredit said.

The pound's recent falls and its underperformance compared with other higher-beta currencies suggest markets "have turned less confident" that the Bank of England "will be able to stick to its broadly optimistic tone" at Thursday's policy announcement, ING analysts said.

Increasing risk aversion on financial markets has caused sterling to weaken in recent days, they said. GBP/USD fell 0.2% to a one-month low of 1.3630, according to FactSet, though a cautious Fed announcement could prompt a recovery to around 1.3700 as the dollar weakens, ING said.


The Fed's policy decision due later should be neutral for European corporate bond markets as signals regarding a planned tapering of bond purchases later this year are widely expected, said UniCredit.

"As an indication that the Fed will start tapering its asset purchases by the end of the year is broadly expected, this should be neutral for the European credit market," analysts at the bank said.

Fed officials have said that they could begin reducing, or tapering, their $120 billion in monthly purchases of Treasurys and mortgage-backed securities this year.

Some market observers expect Chairman Jerome Powell may signal they are likely to start the process at their following meeting in November.

Eurozone government bond yields were trading higher across the board, indicating better risk sentiment at the start of the day. Aside from any headlines on troubled Chinese property conglomerate Evergrande, the day's focus will be the Fed's policy announcement.

"Investors will be looking to determine whether recent events around surging energy prices, and Evergrande, have altered the prevailing narrative," said Michael Hewson, chief market analyst at CMC Markets.

The ECB's strong corporate bond purchases last week have helped credit spreads to stay largely stable, said UniCredit. Official data showed the central bank ploughed EUR1.058bn in net corporate bond purchases in the week ending Sept. 17, bringing total net purchases to EUR5.4 billion so far this month, analysts at the bank said.

ECB's month-to-date purchases in September represent 77% of this month's estimated net issuance of EUR 7bn billion from investment-grade issuers tracked by the Market iBoxx corporate bond index, they sid.

"Against this backdrop, and despite decent primary market activity, investment-grade corporates closed almost flat to marginally wider yesterday," they said.

A moderately looser fiscal stance, that could be expected under the most likely coalition scenarios after the German elections, is unlikely to have an impact on government bond yields as the ECB's bond buying program will continue to keep Bund supply relative scarce, said UBS Global Wealth Management's economist Dean Turner and strategist Maximilian Kunkel.

"In fact, if Germany issues green bonds to fund investment in preventing climate change, demand is likely to be even higher given the increasing demand for this sub-asset class," they said.

Only a left-wing, red-red-green government could put upward pressure on bond yields in the short term because markets would likely translate significant fiscal pledges into a more substantial supply in Bunds.


Oil prices rose, with weekly API inventory data showing a sharp decline in inventories, according to DNB Markets' Helge Andre Martinsen. U.S. crude stocks fell 6.1 million barrels versus a consensus forecast of 3 million, making the overall figures "bullish," he added.

Elsewhere, in a relatively quiet week, investors are absorbing Russian forecasts for a bumper production year next year, awaiting U.S. Energy Information Administration data due later Wednesday, and continuing to watch European gas prices.

Copper prices jumped as Chinese traders return to the market following a public holiday. Three-month copper prices on the LME rose 2.3% to $9,221 a metric ton.

Chinese markets reopened Wednesday for the first time since Friday and helped push up metals prices which had slumped during their absence.

Some positive news about China Evergrande also helped lift the mood: the indebted company said they will meet an interest payment tomorrow. Still, uncertainty remains about the property giant's future.

"Prices mean-reversed after falling during the Chinese absence and there was a bit of positive sentiment sipping back into markets after the real estate unit of China Evergrande Group, " Anna Stablum at Marex said.

Gold prices were unchanged in European trade.



Europe's Covid-19 Vaccination Success Faces Winter Test

Europe's successful vaccination campaigns now face their toughest test: Winter.

The coming months will test whether high vaccination rates and a patchwork of low-intensity public health measures can keep the highly contagious Delta variant in check as temperatures drop and people huddle indoors.


Traton Warns Supply Shortages Will Hit 3Q Vehicle Sales

Traton SE said Wednesday that shortages of semiconductors and other parts are hitting sales in the third quarter and are expected to continue into the next year.

Volkswagen AG's truck maker said vehicle sales in the current quarter will be significantly lower than planned due to the shortages, which it expects to continue into and beyond the fourth quarter. All of its brands, including recently acquired Navistar, are affected, it said.


Ifo Institute Cuts Growth Forecast for Germany in 2021 to 2.5%

The Ifo Institute has cut its growth forecast for Germany in 2021 by 0.8 percentage point to 2.5%, as the economy didn't rebound as strongly as expected in the third quarter.

The Ifo downgraded its forecasts for 2021, but raised its growth forecast for 2022 by 0.8 percentage point to 5.1%. In 2023, growth will be 1.5%, the Ifo said.


Entain Considers Improved GBP16.4 Bln Bid From DraftKings

Entain PLC said Wednesday that it is considering a new, improved takeover bid from DraftKings Inc. after rejecting an earlier offer from the U.S. digital sports-betting and entertainment company.

Entain, a betting-and-gambling group, said the new offer is for 2,800 pence ($38.25) a share, consisting of 630 pence in cash and the balance payable in DraftKings shares. This represents a premium of 46% to Entain's closing price on Monday, and values the company at 16.40 billion pounds ($22.40 billion).


Iliad to Acquire UPC Poland From Liberty Global

Iliad SA said Wednesday that it has agreed to acquire cable operator UPC Poland for an enterprise value of 7 billion zloty ($1.78 billion) from Liberty Global PLC.

The French telecommunications company said its subsidiary, Play, which it acquired in 2020, would take 100% of UPC Poland's share capital in the deal that would help Iliad to expand further into the Polish telecom market.


Airbus Confident in Raised Production Targets, CCO Says

Airbus SE's order book is strong enough to assure production will continue to grow as previously guided, and could perhaps be raised further, according to the European plane maker's chief commercial officer.

Airbus in May said that it was stepping up production, targeting a monthly production of 64 planes of the A320 family by the second quarter of 2023, a higher rate than before the pandemic. Group CCO Christian Scherer told journalists late Tuesday that he was confident that the order book is currently strong enough to ensure this level of production, and that it could even go higher.


Legrand Backs Mid-Term Targets; to Focus on Fast-Growing Divisions

Legrand SA on Wednesday confirmed its mid-term sales and operating-margin targets, and said that it plans to concentrate on spurring growth in its most promising business segments.

Marking its capital-markets day, the French industrial group reiterated its mid-term targets, set out in February, of achieving average annual organic sales growth between 5% and 10%, as well as an adjusted operating margin of around 20%. Legrand is also aiming for normalized free cash flow of between 13% and 15% of sales on average.


Swedbank Launches Search for New Compliance Chief

STOCKHOLM-Swedbank AB said Tuesday it has launched a search process to find a new chief compliance officer after its current compliance officer, Ingrid Harbo, decided to retire.

Ms. Harbo, who has been a member of the Swedish bank's group executive committee since 2019, will leave the company on March 31, 2022, and remain in her role until then, Swedbank said in a statement Tuesday.



Fed Meeting Will Focus on Taper Timetable

Federal Reserve officials will look to forge agreement Wednesday over how and when to begin reducing their large-scale bond-buying efforts, which they launched early in the pandemic to stimulate the U.S. economy.

The central bank in July gave its first signal that officials were more confident the economy was meeting their goals. Since then, senior leaders including Fed Chairman Jerome Powell have indicated they could start to reduce, or taper, those purchases this year.


China Evergrande Onshore Unit Will Pay Yuan Bond Interest on Time

An onshore unit of China Evergrande Group said Wednesday it would make an interest payment on time this week, as investors wait to see if the debt-ridden conglomerate makes a separate payment due on dollar bonds that it is expected to miss.

The unit, Hengda Real Estate Group Co., will pay 232 million yuan, or the equivalent of about $35.9 million, of interest on its 5.80% September 2025 onshore yuan-denominated bond on Thursday, the company said in a stock-exchange filing.


Ida Storm Damage Expected to Cost Insurers at Least $31 Billion

Ida is poised to join Katrina, Sandy, Harvey and Irma on the list of the top five costliest hurricanes as measured by insured losses.

Estimates of Ida's damage have continued to climb as insurers disclose their costs. In one of the newest revisions, Risk Management Solutions Inc., a major catastrophe-risk modeling firm, last week estimated Ida's U.S. insured losses at between $31 billion and $44 billion since its Aug. 29 landing in Louisiana.


BOJ Sticks to Ultra-Easy Monetary Policy Path

TOKYO--The Bank of Japan on Wednesday confirmed it would stick to an ultra-easy monetary policy, while other major central banks are moving toward scaling back their asset purchases.

The Japanese central bank maintained its target for short-term interest rates at minus 0.1% and its target for the 10-year Japanese government bond yield at around zero. It also reiterated that it would purchase JGBs without an upper limit.


Infrastructure Plan Faces Fresh Uncertainty as Democrats Remain Divided

WASHINGTON-Persistent divisions among Democrats over the size of their climate and social-welfare plan are threatening to derail much of President Biden's agenda, as progressives signal that they could block passage of a roughly $1 trillion infrastructure package next week.

As the party struggles to find a path forward, Mr. Biden plans to meet Wednesday with Senate Majority Leader Chuck Schumer (D., N.Y.) and House Speaker Nancy Pelosi (D., Calif.) at the White House to discuss the two proposals, according to a person familiar with his schedule. Mr. Biden was also expected to convene a group of House and Senate Democrats to discuss the proposals as he takes a more prominent role in steering his legislative agenda through Congress.


Debt-Limit Suspension Passes House, Faces Standoff in Senate

WASHINGTON-The House passed Tuesday a measure keeping the government funded until early December and suspending its borrowing limit through 2022, but without having resolved the partisan standoff poised to derail it in the Senate.

With less than two weeks before the government's current funding expires at 12:01 a.m. Oct. 1, the House passed in a 220-211 party-line vote a package unveiled earlier in the day that would fund the government through Dec. 3, 2021, and suspend the debt limit through Dec. 16, 2022. The Treasury Department is currently using emergency measures to cover America's bills for several months until the debt limit is raised or suspended again.


RBA Ramps Up Warnings About Soaring House Prices, Instability Risk

SYDNEY-The Reserve Bank of Australia has significantly ramped up warnings about the growing risk of financial-sector instability if house prices continue to surge, adding to already considerable levels of household debt across the economy.

Michele Bullock, RBA assistant governor for financial system, said in a speech on Wednesday that even though Australia's banks have strong balance sheets and lending standards are being maintained, "a high level of debt could pose risks to the economy in the event of a shock to household incomes or a sharp decline in housing prices."


SEC's Gensler Doesn't See Cryptocurrencies Lasting Long

WASHINGTON-Securities and Exchange Commission Chair Gary Gensler said Tuesday he doesn't see much long-term viability for cryptocurrencies, underscoring the importance of protecting investors in the market and bringing it under regulatory oversight.

Mr. Gensler likened the thousands of cryptocurrencies in existence to the so-called wildcat banking era that took hold in the U.S. from 1837 until 1863 in the absence of federal bank regulation. Before President Abraham Lincoln created the Office of the Comptroller of the Currency, banks issued their own currencies, which they sometimes refused to redeem for their purported value in gold or silver.


Liz Cheney's Re-Election Bid Pits Trump Against Bush

WASHINGTON-The race for Wyoming's single U.S. House district has pitted two of the biggest names in Republican politics against one another: both of the party's living former presidents.

Former President George W. Bush's first campaign event of the 2022 midterms will be a fundraiser to support Rep. Liz Cheney, the Wyoming Republican who is among former President Donald Trump's top targets to unseat. The fundraiser will be held next month in Dallas, according to a copy of an invitation viewed by The Wall Street Journal.


U.S., Russian Military Officials Meet Amid Concerns About Terrorism Fight

HELSINKI-The Pentagon's top officer met with his Russian counterpart in the Finnish capital Wednesday amid American and allied efforts to find ways to fight terrorism after the departure of U.S. and allied troops from Afghanistan last month.

Chairman of the Joint Chiefs of Staff Army Gen. Mark Milley met here with Chief of Russian General Staff Gen. Valery Gerasimov, officials said. U.S. military officials declined to provide any details of the meeting, except to issue a brief statement saying the two discussed "risk reduction and operational de-confliction."


China's Xi Commits to Stop Building Coal Plants Abroad

Chinese President Xi Jinping on Tuesday said Beijing would stop building coal-fired power plants abroad, in a public commitment to redirect the country's huge engineering industry away from adding to a source of global pollution.

Beijing has faced pressure from the U.S., the European Union and environmental groups for having continued to finance and build coal-fired power plants in many developing countries, even as it said it would cut greenhouse emissions at home.


Write to

Write to us at

We offer an enhanced version of this briefing that is optimized for viewing on mobile devices and sent directly to your email inbox. If you would like to sign up, please go to

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


(END) Dow Jones Newswires

September 22, 2021 06:18 ET (10:18 GMT)

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