Finance

U.S. stock futures were higher in overnight trading on Monday following a major sell-off on Wall Street that resulted in the S&P 500’s worst day since May.
Dow Jones futures rose 131 points. S&P 500 futures and Nasdaq 100 futures both traded in positive territory.

The major averages tumbled on Monday due to a confluence of concerns including the imminent Federal Reserve meeting, the lingering delta variant, potential economic disruption in China and the debt ceiling deadline.
However, stocks closed well off their lows of the day.
The S&P 500 slid 1.7% for its worst day since May 12 of this year. At it’s low of the day, the 500-stock average pulled back 5% on an intraday basis from its high. It currently sits 4.1% from its record.
The Dow Jones Industrial Average plummeted 614 points, or 1.8%, for its biggest one-day drop since July 19. The Nasdaq Composite dropped 2.2% as growth pockets of the market were some of the hardest hit.

The Federal Reserve begins its two-day policy meeting on Tuesday and investors are looking for more information from Chairman Jerome Powell about the central bank’s plans to taper its bond buying, specifically when that will happen. Powell said last month that he sees the Fed slowing its $120 billion in monthly purchases at some point this year.

The Fed releases its quarterly economic forecasts, the so-called dot plot, along with the statement on interest rates at 2 p.m. ET Wednesday. Powell will have a a press conference after.
“We’re going to have to see proof that the Fed dot plots don’t come out in a way that spooks the market,” said said Yung-Yu Ma, chief investment strategist at BMO Wealth Management.
Weakness in China’s equity market reverberated into U.S. stocks on Monday. The benchmark Hang Seng index plunged 4% as struggling real estate developer China Evergrande Group teeters on the brink of default.
“We’re going to have to see some proof that the Chinese government is taking steps to manage this,” added Ma.
The Delta variant remains a global health threat as the colder months approach and vaccination hesitancy persists among some Americans.
Stocks linked to global growth led losses on Monday and energy names took a hit thanks to a 2% drop in U.S. oil prices. Banks stops dropped as bond yields fell.
The Cboe Volatility index, Wall Street’s fear gauge, jumped above the 26 level on Monday, the highest since May.
Investors are also concerned about the deadline to raise the debt ceiling and possible tax increases. Congress returned to Washington from recess rushing to pass funding bills to avoid a government shutdown.
September is a historically volatile month for stocks and after the S&P 500’s 16% rally year-to-date, many investors have said the market is due for a pullback. Some strategists called Monday’s sell-off a buying opportunity.
“The market sell-off that escalated overnight we believe is primarily driven by technical selling flows ([commodity trading advisors] and option hedgers) in an environment of poor liquidity, and overreaction of discretionary traders to perceived risks,” Marko Kolanovic, JPMorgan chief global market strategist, said in a note Monday.
While others said volatility is likely to persist until some of the risks are resolved.
“We’re not in the camp that this small pullback represents a special buying opportunity,” said Ma. “There could easily be more volatility depending on what happens with the Fed meeting…similar with the debt ceiling. With the overhang and then negotiations, this is definitely going to be pushed to the wire.”
Cryptocurrencies also pulled back on Monday with bitcoin ending the day about 7% lower. The slide resurfaced the debate about whether bitcoin can or should serve as a safe-haven asset.
FedEx, Adobe, AutoZone and Stich Fix report quarterly earnings on Tuesday.
— with reporting from CNBC’s Hannah Miao.

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CHINA’S FINANCIAL authorities are honing a new skill: the “marketised default”—or an orderly market exit and well-managed restructuring for troubled companies. The term has surfaced in government documents and local media as of late as regulators become adept at managing larger, more frequent and highly complex defaults. They have had some successes. Evergrande, a massive Chinese property developer on the brink of collapse, is proving to be anything but.The company, the world’s most indebted property firm with $300bn in liabilities, is expected to default on September 23rd on both yuan- and dollar-denominated interest payments. Far from being a well-managed process, the distress is roiling markets across the globe and dragging other weak developers down with it. Major indices in Europe and America fell on September 20th as Evergrande’s situation appeared to worsen. Yields on the bonds of a number of struggling Chinese developers have soared. Hong Kong-traded shares in one large Shanghai-based group, Sinic Holdings, collapsed by nearly 90% on September 20th on fears that it, too, would fail to repay a bond due in October. R&F Properties, another highly indebted group, has said it will raise up to $2.5bn by borrowing cash from company executives and selling a property project. Several financial institutions with high exposure to the property sector have suffered falls in their market value. The price of iron ore fell below $100 per tonne on September 20th for the first time in a year on fears that Chinese homebuilders will construct fewer properties. The crackdown on developer debt is not an isolated event but one of several campaigns Xi Jinping, China’s president, is using to remould the country. A sweeping clampdown on internet-technology companies has wiped out more than $1trn in shareholder value since early this year. A number of New York-listed Chinese companies have seen their entire business models destroyed. These changes, along with the goal of improving housing affordability and ridding the property market of speculation, have been encapsulated by Mr Xi in the phrase “common prosperity”. “A regime shift is occurring without necessarily the markets fully comprehending the enormous underlying change to the structure of the economy,” said Sean Darby of Jefferies, an investment bank.Analysts and short-sellers have been predicting the death of Evergrande for years. Its chairman, Xu Jiayin, who founded the company in 1996, put up $1bn of his own cash in 2018 to meet a shortfall in demand for an Evergrande bond with a 13% coupon. The company has relied on ever-increasing short-term debts, often at higher and higher costs, to fund a business model that relies on borrowing money to develop properties and selling them years before they are completed to generate cash from buyers’ deposits. When central-government regulators stepped up their campaign against leverage last August, the first major cracks began appearing in its business. Authorities have constricted developers’ capacity to continue accumulating debt, limiting liability-to-asset ratios to less than 70%, net debt-to-equity ratios to less than 100% and mandating levels of cash that are at least equivalent to short-term debt. The policy has changed the nature of the business. Unable to continue perpetually expanding their debts, Evergrande and several other weak companies have slashed home prices and halted projects in order to preserve cash. Evergrande is said to be offloading housing projects in an attempt to generate just enough cash to make payments to suppliers. It is also selling off its land at a 70% discount, says one investor. UBS, a Swiss bank, has identified ten other Chinese property groups with 1.86trn yuan ($290bn) in contracted sales that are in similar risky positions. How far will the turmoil spread? The volatility leading up to the expected default on September 23rd has already given investors a taste of the risks emanating from China’s deleveraging campaign. However, many analysts still believe severe contagion can be ring-fenced to groups with known connections to Evergrande and other weak property developers. Start with banks, the main area of concern on regulators’ minds. China’s banking sector has lent heavily to developers in recent years. A stress test on banks’ exposure to the property sector conducted recently by the central bank concluded that an extreme scenario, in which loans to developers suffered a 15-percentage-point rise in their non-performing ratios, would eat up 2.1 percentage points of banks’ overall capital-adequacy ratios, reducing the industry average to 12.3%. Such a drop in the banks’ capital buffers, evenly spread across the banking sector, would be a tolerable depletion of protection. But such a crisis would not hit banks even-handedly; weaker banks would see a much larger reduction, note analysts at S&P Global, a ratings agency.Ping An Bank and Minsheng Bank, both hit by sell-offs in recent days, had 10.6% and 10.3% of their total loan books extended to property groups in the first half of the year. Minsheng has tight links to Evergrande. Shengjing Bank, which is majority-owned by Evergrande, is thought to have lent heavily to the property company. A banking crisis is not the base case for many investors watching the situation. But “the situation would change very quickly” if a bank of Minsheng’s scale proved vulnerable, says a China-based executive at an asset manager. Central authorities would probably step in swiftly at the first sign of distress at a major bank, the investor adds.Of more immediate concern are Evergrande’s links to China’s shadow banking system. About 45% of its interest-bearing liabilities in the first half of 2020 were from trusts and other shadow lenders, which are opaque and typically charge higher rates, compared with just 25% for bank loans, according to Gavekal, a research firm.Panic in the offshore bond market is another worry. Chinese developers are the largest issuers of dollar-denominated bonds traded in Hong Kong, and among them Evergrande is the single largest issuer. The company’s bonds have traded at less than 30 cents to the dollar over the past week. Many other developers’ yields have shot up above 30%. Investors are waiting for a signal from Beijing. So far the absence of any strong sign of support has shown that regulators do not want to step in as they did recently with Huarong, a state-owned distressed debt investor that required a full bail-out in August. The treatment of Huarong, which is intricately connected to China’s financial system, suggests that Mr Xi is still intent on avoiding a generalised market meltdown. If Evergrande does default, there is still the possibility that the government may step in to help individuals. The state, which is likely to be worried by protests in recent days by savers who have bought Evergrande’s wealth-management products, is expected to be forced to broker a partial bail-out for assets most connected with social stability.Such a process would be focused on the properties the company has already sold to ordinary people and which are not yet built. Capital Economics, a research firm, estimates there are about 1.4m of those. This could involve a number of companies carving up construction projects across the country and taking over assets in the provinces where they are based. By keeping these projects under development, suppliers and contractors would also in effect be bailed out.One trick in organising such a bail-out will be finding buyers. The crackdown on leverage has left few developers with excess cash to make such purchases. Therefore, says Stephen Jen of Eurizon Capital, an asset manager, local governments may need to step in.Perhaps the biggest contagion risk flaring up in the market is not that posed by Evergrande itself but by Mr Xi’s unyielding crackdown on leverage. In this sense Evergrande is not the root cause of the troubles in China’s property sector, says Logan Wright of Rhodium Group, a research firm. Instead it is a symptom of the Chinese Communist Party’s efforts to reshape the nature of the market. Following the assault on China’s vibrant tech sector Mr Xi has given analysts every reason to believe he intends to see this deleveraging campaign through, says Mr Wright.These implications are bigger than the current market rout. China’s property sector accounts for 20-25% of its economy. An extended campaign against developer debt could significantly lower China’s growth prospects, says Tommy Wu of Oxford Economics, a research firm. But such a strategy could lead to much greater economic and financial turmoil further down the road. Regulators may eventually be forced to bail out the property industry along with the financial one, Mr Wu says. Such a worst-case scenario poses concerns far beyond the fate of Evergrande, and raises questions over where Mr Xi’s relentless and wide-reaching campaigns are leading China. More

ACROSS THE world, a natural-gas shortage is starting to bite. Prices of power in Germany and France have soared by around 40% in the past two weeks. In many countries, including Britain and Spain, governments are rushing through emergency measures to protect consumers. Factories are being temporarily switched off, from aluminium smelters in Mexico to fertiliser plants in Britain. Markets are frantic. One trader says it is like the global financial crisis for commodities. Even in America, the world’s biggest natural-gas producer, lobby groups are calling on the government to limit exports of liquefied natural gas (LNG), the price of which has climbed to $25 per million British thermal units (mBTU), up by two-thirds in the past month.In one sense the crisis has fiendishly complex causes, with a mosaic of factors from geopolitics to precautionary hoarding in Asia sending prices higher. Viewed from a different perspective, however, its causes are simple: an energy market with only thin safety buffers has become acutely sensitive to disruptions. And subdued investment in fossil fuels may mean higher volatility is here to stay.The shortfall has taken almost everyone by surprise. In 2019 there was plenty of gas on the international market, thanks to new LNG plants coming online in America. When the covid pandemic struck and lockdown constrained demand, much of the excess gas went into storage in Europe. That came in handy last winter, which was particularly cold in northern Asia and Europe. The freeze pushed up demand for heating. In Asia gas prices quadrupled in three months. Buyers, such as national gas companies, looked to the LNG market to fill out supply. Many Europe-destined cargoes were diverted to Asia. Europe, by contrast, drew down on its reserves. Prices there only inched up.This year odd weather has featured again. A hot summer has added to booming gas demand in Asia. The region accounts for almost three-quarters of global LNG imports, according to AllianceBernstein, a financial firm. China led the way, thanks to its swift economic recovery. In the first half of 2021 its power generation jumped by 16% compared with the previous year. Three-fifths of China’s power is generated by coal; a fifth comes from hydropower. But hydropower generation has been low because of a drought. And coal demand fell partly because of environmentally friendly policies, such as replacing coal-burning boilers with gas ones. Investment in mining coal has also been low. That meant more reliance on natural gas. In the first half of the year, gas generation grew quicker than coal or hydropower. Chinese LNG imports grew by 26% from the previous year. Other countries have seen higher demand too, partly because of the warm summer in Asia. In addition, Japan, South Korea and Taiwan have been topping up their storage facilities. Meanwhile, a drought in Latin America, which gets half its power from hydro, has increased the need for gas there. The region’s LNG demand has almost doubled in the past year. Booming demand has been met with lower supply of LNG. A long list of small disruptions has nibbled away at global output. Some of the outages were caused by maintenance work delayed during the covid pandemic. Others, such as a fire at a Norwegian LNG plant, were unplanned. The combined effect of all these disruptions was to cut global LNG supply by roughly 5%, estimates Mike Fulwood of the Oxford Institute for Energy Studies (Mr Fulwood’s daughter works at The Economist).With LNG being sucked into Asia, less has been left for European buyers. LNG imports into Europe are about 20% lower than they were last year. Gas inventories are about 25% below their long-term average. Gas production has also dropped in Britain and the Netherlands. Analysts had expected Russia’s Gazprom, which supplies a third of Europe’s gas, to make up the difference. But even though it met all of its long-term gas contracts to Europe this year, it has not sold additional gas in the spot market. Some suspect Gazprom wants to speed up the launch of Nord Stream 2, a big gas pipeline.Europe has been hit by peculiar weather in other ways. Across the north-west of the continent the air has been still, reducing wind generation. In Germany, for example, during the first two weeks of September wind-power generation was 50% below its five-year average. Moreover, usually European utilities respond to high gas prices by using more coal. But the price of coal is also at near-record highs on the back of demand for electricity and production bottlenecks. The cost of European carbon permits is at record highs too. These give the holder the right to emit an amount of greenhouse gases. Because burning coal emits more than burning natural gas, expensive carbon permits add even more to the price.America’s gas market has responded to international demand. In the first half of the year America exported about a tenth of its natural-gas production, a 42% increase on the year before, according to the Energy Information Administration, a government statistical agency. But even if America produced more domestically, it would not help to balance the international LNG market. LNG facilities in America are running nearly at full capacity. So are liquefication facilities in other big gas-producing countries, such as Australia and Qatar. Expanding LNG plants is possible (Qatar plans to increase its capacity by 50%) but takes years to do.What could bring the heat out of the market in the short term? One possibility is substitution. That has begun to happen in some places. Europe is burning more coal than this time last year. Some power plants in Pakistan and Bangladesh switched to oil from LNG. Another possibility is an increase in supply from Russia. But it is unclear how much more Russia can produce. A final possibility is warmer weather. But meteorologists are already forecasting a cold winter. Gas prices are unlikely to come down to earth soon. More

U.K. fintech firm Wise launched a feature called Assets, which lets users invest in a portfolio of stocks.
Customers can also instantly spend or send up to 97% of their invested money.
The move comes after a surge of retail investors participating in the stock market.

The Wise logo displayed on a smartphone screen.
Pavlo Gonchar | SOPA Images | LightRocket via Getty Images

LONDON — British financial technology firm Wise debuted an investments feature Tuesday that lets users invest in stocks through multiple currencies and spend their holdings.
The new feature, called Assets, allows customers to invest in BlackRock’s iShares World Equity Index Fund, which tracks a basket of 1,557 of the world’s biggest public companies. The fund’s holdings include Apple, Amazon and Alphabet.

Users will also be able to instantly spend up to 97% of the invested money in their accounts with a Wise debit card, or send funds overseas. The idea is that customers can hold their funds in stocks, but also still spend and send the money in real time.
“Holding money in various currencies can be hard to manage efficiently,” said Kristo Käärmann, Wise’s CEO and co-founder.
“Assets is seeking to solve that problem, by providing an opportunity for customers to earn a return on their money with us, in a host of different currencies, all in one place.”
Wise says it is holding back 3% of users’ invested cash as a “buffer” in case of any large market fluctuations, to prevent customers’ balances from dipping into negative territory.
The company is initially launching Assets for personal and business customers in the U.K. but plans to roll out the product in Europe at a later date.

Formerly known as TransferWise, Wise began life as a platform offering cheaper currency exchange. It has since expanded its range of products to include multi-currency accounts linked to a debit card.

Now, Wise is rolling out investment accounts after having secured authorization from U.K. regulators last year.
The company says its customers now hold a total of £4.3 billion ($5.9 billion) in their balances globally.

Retail investor boom

Wise’s investing feature is different to that of other fintech platforms like Robinhood and Revolut, which let users trade a variety of different stocks, often without paying commission fees.
With Assets, Wise users will get exposure to hundreds of stocks and can use their holdings to pay for goods or send money abroad in a number of different currencies.
Wise charges an annualized 0.55% service fee and a 0.15% fund fee on the value of a user’s assets, which is taken monthly in arrears.
The launch of Assets comes after a surge in retail investors participating in the stock market, as consumers searched for alternative ways to earn a return on their savings.
Earlier this year, amateur traders inspired by a Reddit forum flocked to GameStop, the video game retailer, helping to fuel wild swings in its stock price.
It’s the first major product update since Wise went public in London earlier this year. Rather than raising money in an initial public offering, the firm’s employees and investors sold their shares directly to the public.
The debut was viewed as a big win for the U.K., where the government is looking to reform London’s listing regime to make it more attractive for tech companies following Brexit.

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Oil giant Royal Dutch Shell announced a deal to sell the entirety of its Permian Basin assets to ConocoPhillips for $9.5 billion in cash.
The sale is set to close in the fourth quarter this year, the companies said.

Oil giant Royal Dutch Shell announced Monday a deal to sell the entirety of its Permian Basin assets to ConocoPhillips.
ConocoPhillips is purchasing the West Texas business for $9.5 billion in cash, the companies said in a release release.

The assets span roughly 225,000 net acres with current production about 175,000 barrels per day, the statement said. The sale is set to close in the fourth quarter this year.
The deal would mark Shell’s complete withdrawal from onshore production in Texas. Shell will maintain its offshore production in Texas.
The move comes as the oil industry faces increasing pressure to invest in renewable energy and lower its carbon emissions in the face of a changing climate.

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Bundles of steel from Nucor Corp. sit for sale to at Thompson Building Materials in Lomita, California, U.S., on Thursday, Aug. 30, 2012.
Patrick Fallon | Bloomberg | Getty Images

Check out the companies making headlines in midday trading.
American Airlines, United Airlines, Delta Air Lines — Shares of American Airlines the major airlines rose about 3% Monday after the White House said it would ease travel restrictions for international travelers who are vaccinated against Covid-19. Shares of Delta and United each gained more than 1%.

China Evergrande Group — Shares of the embattled Chinese property giant dropped 10% on the Hong Kong Stock Exchange. The company has been scrambling to pay its suppliers, and warned investors that it could default on its debts. Last week, the company said its property sales will likely continue to drop significantly in September several months of weakness.
Centerpoint Energy, Dominion Energy — Utility stocks rose on Monday as investors shifted toward defensive plays during the broader market slide. Shares of Centerpoint rose 1.2% and Dominion’s stock ticked up 0.7%.
Nucor, Freeport-McMoRan, Ford, Caterpillar — Stocks linked to global growth declined Monday. Steel stock Nucor declined 7.6%, miner Freeport-McMoRan fell 5.7%, auto maker Ford dropped 5.4% and construction equipment manufacturer Caterpillar retreated 4.5%.
APA, Devon Energy — Energy stocks tumbled amid a drop in oil pries on concerns about the global economy. The S&P 500 energy sector fell 3.3%, becoming the worst-performing group among the 11 groups during Monday’s market sell-off. APA shed 6.1%, Devon Energy and Occidental Petroleum each dropped 5.4% and Hess slid 5.2%.
Goldman Sachs, Bank of America, JPMorgan Chase — Financials stocks declined as the U.S. 10-year Treasury yield dropped, with falling rates typically crimping bank profits. Goldman Sachs, Bank of America, Citigroup, JPMorgan Chase and Morgan Stanley all delined by around 3% or more.

ARK Innovation, Coinbase, Tesla, Zoom, Square — Shares of Cathie Wood’s flagship fund dropped 4.4% as innovation names experienced harsh selling. Coinbase lost 3.5%, Teladoc fell 5.3%, Unity Software shed 6.7%, Tesla dropped 3.9%, Square dipped 2.2% and Zoom Video moved 2.4% lower.
Pfizer — The drug maker stock ticked 0.7% higher after the company said its Covid vaccine is safe and appears to generate a robust immune response in kids ages 5 to 11. If the FDA spends as much time reviewing the data for that age group as it did for 12- to 15-year-olds, the shots could be available in time for Halloween.
AstraZeneca — Shares of the United Kingdom-based pharmaceutical company popped 5.3% in midday trading after announcing that its breast cancer drug Enhertu showed positive results in a phase-three trial.
Invesco — Invesco shares declined 8.7% Monday. The stock ran up on Friday following a Wall Street Journal report that the asset manager is in talks to merge with State Street’s asset management unit. The report, citing people familiar with the matter, said a deal is not imminent and might not happen at all.
— CNBC’s Maggie Fitzgerald, Yun Li and Jesse Pound contributed reporting

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China’s request to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (cptpp) landed on the desk of Damien O’Connor, trade minister of New Zealand, on September 16th. The location was a fitting nod to the deal’s history. In 1999 a meeting between the trade ministers of two small export powerhouses, New Zealand and Singapore, kicked off what became one of the world’s largest free-trade areas. The timing was significant, too. China’s application came just a day after the announcement that America and Britain would assist Australia in building a fleet of nuclear-propelled submarines. While the United States is still the dominant military power in Asia, China’s economic heft is now unparalleled. The latter’s attempt to join the 11-member trading alliance, however far-fetched it seems, raises the cptpp’s geopolitical significance beyond what was ever imagined more than two decades ago. It also underscores the folly of an inward-looking America abandoning the pact’s forerunner, the Trans-Pacific Partnership (tpp), in January 2017. The cptpp, a slight modification of that original agreement, took effect in late 2018. It is one of the most advanced trade deals in the world. When New Zealand and Singapore first mooted a trading alliance out of frustration with the slow speed of World Trade Organisation (wto) negotiations, China was not yet even a member of the global trading body and its economic heft was piddling relative to today. Its share of global merchandise exports was 3.4%. Last year, that figure ran to 14.7%, making China the only country in the world which accounts for a double-digit share. When America was still actively part of building the tpp alliance, it was portrayed—and sold to Americans—as a tool to keep China from exercising influence over trading rules. It is still difficult to imagine China’s application being successful in the near term. The cptpp is a detailed agreement requiring deep economic integration, and new members must be admitted by unanimous approval. “China is surprisingly close to meeting cptpp conditions in many areas. But where there are gaps, they’re huge,” according to Jeff Schott of the Peterson Institute for International Economics (piie), a think-tank in Washington, dc. He reckons the country has made huge strides in recent years on intellectual-property and investment rights. But the dominance of state-owned enterprises (soes), weak labour rights and concerns about data privacy leave a lot of ground to catch up. The treatment of soes is a perpetual bugbear of many of China’s trading partners. To gain membership of the cptpp, Vietnam in particular had to agree to restrictions on support for its own state-run firms and increased transparency on their operations and structure, which China would be expected to mirror. Data governance is a case where China is, if anything, moving in the opposite direction to the one which would be needed for membership. The cptpp countries have committed themselves to promoting the cross-border transfer of information. In contrast, China has become the global exemplar of data localisation: a data-protection law passed last month will make it harder for foreign companies to transfer data out of the country. The existing members of the pact are also unlikely to accept admission on a promise of changes to come. The relationship between China and many of its big trading partners and neighbours has soured in recent years, making membership a much harder diplomatic sell than joining the wto, which it did in 2001. Back then, says Kazuhito Yamashita, a former Japanese trade negotiator who was involved in the accession talks, the optimists argued that China should be allowed to join the wto and that problems could be rectified afterwards through enforcement. The opposing view was that it would be very difficult to change things in a communist economy. “That was right.” But even if its chances of joining the cptpp soon are slim, there may be other reasons for China to announce its intention. Most countries did not aspire for membership in order to become part of an anti-China bloc. Indeed, some might even look eagerly on the potential economic gains of having China on board. When negotiations for America to join began in 2008, the United States was a larger trading partner than China for several of the countries that are now members of the agreement—New Zealand, Peru and Chile, for instance. Today, among cptpp members only Canada and Mexico trade more with America than with China. A piie paper published in 2019 estimated global income gains from the cptpp as it stands run to $147bn a year. If China were included, that would rise to $632bn. The benefits to many of the members would run to more than 1% of their real income.But for other governments, relations with China have deteriorated to the extent that its admission borders on the inconceivable. “Countering China’s political, economic, and cyber influence is the animating motivation at the heart of many Australian and Japanese policies. The strategic calculus about China is solidifying in both countries,” says Nigel Cory, a trade expert at the Information Technology and Innovation Foundation in Washington, dc, and a former Australian diplomat. Driving a wedge between countries looking at the application primarily as an economic boon and those looking at it mainly as a political threat may prove diplomatically useful for China’s rulers. “This is being driven by a desire to throw a spanner into the works, to have some fun,” says Charles Finny, a former New Zealand diplomat who launched the country’s trade negotiations with China in 2004. China is already the largest member of the Regional Comprehensive Economic Partnership, a larger but shallower trade deal agreed last year. It contains fewer conditions for membership, but unlike the cptpp includes every big South-East Asian economy, as well as South Korea. Membership of both, if it were to happen, would make the country an increasingly formidable leader of commercial diplomacy in Asia.From outside the cptpp, America has no direct bearing on the outcome of the application discussions. The country has influence, of course, and particularly with its immediate neighbours. Its free-trade deal with Mexico and Canada requires any of the three to consult with the others before commencing negotiations with a country that none currently has a trade deal with. Its submarine deal with Australia may also strengthen the latter’s resolve to promote America’s interests in the region, even economic ones. Most bets are that China’s bid to join the agreement will fail. And yet not long ago few would have wagered that China would show more interest in membership than America. If the application means little else, it remains a stark illustration of just how quickly America’s commercial influence in Asia has waned. More

A syringe is filled with a dose of Pfizer’s coronavirus disease (COVID-19) vaccine at a pop-up community vaccination center at the Gateway World Christian Center in Valley Stream, New York, U.S., February 23, 2021.
Brendan McDermid | Reuters

Check out the companies making headlines before the bell:
China Evergrande Group — Chinese property giant Evergrande tumbled more than 10% on Hong Kong Stock Exchange, spooking Asian markets. The company has been scrambling to pay its suppliers, and warned investors twice in as many weeks that it could default on its debts. Last week Evergrande said its property sales will likely continue to drop significantly in September after declining for months.

Pfizer — The pharmaceutical giant said Monday that trials showed its Covid vaccine was safe and effective when used in children ages 5 to 11. Pfizer and partner BioNTech said they would submit the results for approval “as soon as possible.” Shares of Pfizer were down about 1% in premarket trading.
Laredo Petroleum, Occidental Petroleum — Oil and energy stocks dipped in premarket trading on Monday. The SPDR S&P Oil & Gas Exploration ETF is down more than 3% in early trading, on pace for its 3rd straight negative session. Laredo Petroleum is down more than 8%, Callon Petroleum is down roughly 6%, and Occidental Petroleum is down nearly 5%. The losses came as crude oil fell on fears of a global economic slowdown tied to the China property market.
Colgate-Palmolive — The consumer staples stock was upgraded to buy from hold by Deutsche Bank on Sunday. The investment firm said that Colgate’s difficulties with inflation and in some international markets was already priced in to its stock.
JPMorgan, Bank of America — Bank stocks slid in unison amid a decline in bond yields on slowdown fears. Investors flocked to Treasurys for safety as the stock market is set for its biggest sell-off in months. Big bank stocks took a hit as the falling rates may crimp profits. Bank of America and JPMorgan Chase were each down more than 2% in premarket trading. Citizens Financial Group dropped 3%, while Citigroup declined 2.5%.
AstraZeneca — The United Kingdom-based pharmaceutical company announced on Monday that its breast cancer drug Enhertu showed positive results in a phase-three trial. Shares of the company were up more than 1% in premarket trading.

ARK Innovation ETF — Cathie Wood’s ARK Innovation ETF is down 2.75% in the premarket, on pace to snap a 3-day winning streak. Compugen, DraftKings, Coinbase and Square are so of the ETF’s biggest losers this morning.
— with reporting from CNBC’s Jesse Pound and Yun Li.

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