European stock markets push higher as Evergrande fears easing

European stock markets opened sharply higher on Wednesday as concerns about the Evergrande crisis in China began to ease.

The real estate company said a payment due Thursday for an onshore renminbi-denominated bond had “already been resolved through over-the-counter trading.”

Traders are hopeful that the company will come to an agreement with its international bondholders.

China’s central bank has also injected 120 billion yuan (£ 13.6 billion) into the banking system to strengthen the financial system amid concerns over the debt crisis in Evergrande.

In London, the FTSE 100 (^ FTSE) rose more than 1% after the opening, while the CAC (^ FCHI) rose 1.1% in Paris and the German DAX (^ GDAXI) rose 0.6%.

Mining stocks were among the biggest hikes in the FTSE following the news, including Antofagasta (ANTO.L), Anglo American (AAL.L) and BHP Group (BHP.L).

They had fallen earlier in the week over fears that Evergrande’s default would hurt the entire Chinese economy, reducing demand for copper, iron ore, coal and other raw materials.

Across the pond, S&P 500 futures (ES = F) were up 0.6%, Dow futures (YM = F) were up 0.7%, and contracts Nasdaq futures (NQ = F) were up 0.4% at the start of trading in Europe.

Later, all eyes will be on the Federal Reserve’s interest rate decision. The US Federal Open Markets Committee (FOMC) will also present its latest economic projections and the dot plot of expected future rate hikes.

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“Investors will be looking to determine whether recent events around soaring energy prices and Evergrande have altered the dominant narrative, which, until a week ago, had been that this meeting was a point of move on track for the September salary count, which is due Oct. 8, ”said Michael Hewson of CMC Markets.

“A decent number in October would more or less trigger a timeline for the start of a decrease in asset purchases in December or January.”

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Ahead of the August wage report, the Fed meeting was expected to be an opportunity for the US central bank to signal the start of such a program to reduce the amount of its purchasing program. bonds of $ 120 billion (£ 88 billion) per month.

Asian markets were mixed overnight, with the Hang Seng up (^ HSI) 0.5% and the Shanghai Composite (000001.SS) up 0.4%. However, in Japan, the Nikkei (^ N225) slipped 0.7%.

“The latest announcement only proves the efforts of Evergrande and the government to stabilize the situation and prevent defaults,” said Bruce Pang, head of research at investment bank China Renaissance.

Watch: Evergrande worries global investors “purely because of its size”