European markets drop 2% on Evergrande fears

European stocks fell sharply Monday as global markets faced worries about the U.S. Federal Reserve's timetable for cutting lending and worries around struggling real estate developer China Evergrande Group.

 

The pan-European Stoxx 600 index was down about 2.2% early in the second half of the day, with the main fallers being the underlying resources, which are heavily linked to China. European banking sector stocks also fell an average of 4% and were poised for their worst session of the year. The German Dax index was down about 2.9%, which also led to its worst trading session of the year.

 

The decline in the European open came as global equities continued to struggle in September, traditionally a weak month for markets, and the Dow Jones Industrial Average suffered its first loss in 2021 for three straight weeks.

 

Hong Kong's Hang Seng Index led losses among Asia-Pacific markets in overnight trading Sunday, with shares of struggling Chinese property developer China Evergrande Group continuing to fall. Markets in mainland China, Japan and South Korea were closed Monday due to the holidays.

 

Global markets are also feeling some nervousness ahead of the much-anticipated September Federal Reserve meeting, which begins Tuesday. Fed Chairman Jerome Powell will hold a news conference Wednesday at the conclusion of the two-day meeting, and investors will be eager to catch any signs that the Fed will be winding down its loose monetary policy.

 

Powell has said a cut could happen this year, but investors are waiting for more specifics, especially after mixed economic data released after Powell's latest comments. U.S. stock futures were mixed in overnight trading Sunday.