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Investing.com — U.S. stock markets opened higher on Tuesday, rebounding from their worst day in months on Monday as nerves about the Chinese real estate debt crisis eased.
Better-than-expected data from the housing market also supported sentiment. Housing starts and building permits for August both came in above expectations, albeit not by enough to cause any acceleration in the Federal Reserve’s timeline for running down its asset purchases or raising interest rates. The Fed’s latest two-day policy meeting starts later Tuesday.
By 9:45 AM ET (1345 GMT), the Dow Jones Industrial Average was up 232 points, or 0.7%, at 34,202 points. The S&P 500 was up 0.5% and the Nasdaq Composite was up 0.6%.
China Evergrande Group’s (OTC:EGRNY)’s looming default – it has already skipped payments to banking creditors – continues to occupy minds, with many mindful of the fact that it could become the second-biggest bankruptcy in history, after Lehman Brothers’ collapse in 2008.
Wall Street analysts – who hardly distinguished themselves ahead of that fiasco – have been playing down the risk of a systemic financial crisis in China, pointing to the still-extensive range of options available to Beijing.
“We do not see the Evergrande crisis as China’s Lehman moment”, analysts at Citigroup (NYSE:C) wrote, because policymakers will likely prevent systematic risk “to buy time for resolving the debt, and push forward marginal easing for the overall credit environment.”
Mainland Chinese stock markets reopen after a long holiday weekend on Wednesday, and most analysts expect an announcement of at least some measures before then.
