China Power Crisis, Dollar Eases, Stocks Up

China’s benchmark equity indices declined as much as 1.8%. Worries that power supply will hit economic output toward the end of the year were growing. 

Generators were curtailing power output. They couldn’t make a profit selling at regulated prices when coal and gas prices were too high.

Reports that the $1.5 billion sale of an equity investment by China Evergrande won’t free up any funds for bondholders raised fears of heavy losses for creditors who aren’t politically prioritized.

China’s sprawling power crisis has engulfed Beijing. Rolling blackouts have affected hundreds of millions of people, with two-thirds of the country’s provinces also rationing power.

The power crunch has been put down to a mix of factors. That includes the price of coal and China’s ambitious carbon emission plan.

The current energy crisis has led to factory shutdowns and suspensions. Moreover, it has been impacting tech firms like Apple and Tesla.

The country’s energy supply crisis has hit right before Golden Week, one of China’s biggest national holidays, which starts on October 1.

Out of China’s 31 provinces, 20 so far, reportedly had to intermittently cut power. China’s State Grid Corp has issued a power rationing plan for the Chinese capital.

Dollar Eases from Highs; Stocks Up

The dollar eased from a 10-month high as Treasury bond yields stabilized. The dollar index was at 93.808 by 6:15 AM ET (1015 GMT). It was only marginally below the high of 93.905 that it posted on Tuesday.

In early European trade Wednesday, the dollar edged lower, but remained near its best levels this year. Higher U.S. Treasury yields, potential Federal Reserve tapering, and global growth concerns stemmed any losses.

On early Wednesday, U.S. Treasury yields edged lower, with the benchmark 10-year yielding below 1.53%. The dollar, however, has been generally supported by the recent surge in yields.

U.S. stock markets were set to open higher, recovering around one-third of what they lost on Tuesday. The data calendar is largely bare and with no earnings of note due, except Cintas (NASDAQ:CTAS). 

Dow Jones futures rose 214 points, or 0.6% by 6:15 AM ET. This came after the DJIA itself lost 1.6% on Tuesday. Moreover, S&P 500 futures gained 0.8%, recovering from a 2% drop in the previous session. Nasdaq 100 futures added 1.1%. 

European stock markets traded higher on Wednesday, stabilizing after the previous session’s sharp losses. However, concerns remain over slowing growth and high inflation levels.