Asian markets went into freefall (except those closed for holidays) with fears sweeping across markets over the imminent collapse of Chinese Property Conglomerate, Evergrande. Warnings are that Evergrande will soon default on its massive debt and crash, testing a thoroughly inflated market. The flow on effects across borders and markets could be enormous. Debt and Deficit through Central bank policies, across the globe, have inflated massive asset bubbles and this is the Chinese real-estate bubble and all the sectors exposed to it. Demand for construction resources and banking institutions exposed to the industry, are all in the spotlight, while investors will be the biggest final losers.
The Fed begin a two day meeting tonight and this will be watched closely, as they have signalled the tapering of QE. The Bank of England is more likely to act, as inflationary pressures sweep the British economy, and interest rate rises, will be on the table. The German PPI number was a shocker, spiking to12%, following the trend across Europe and the USA. The EUR slipped to 1.1720, while the GBP fell back to 1.3650, ahead of the Central Bank decision.
Commodity prices are being hit hard, lead by a collapse in the demand for iron ore, which has seen the price halve in recent times. The AUD has crashed to 0.7220, while the NZD has fallen to 7010, caught up in the dramatic market implosion.
Central Bank action will be the focus in the coming week along with the dramatic unwinding of equity markets.