ASX 200 jumps as Evergrande confirms it will meet next interest repayment

The ASX 200 is making a comeback on Wednesday

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The S&P/ASX 200 Index (ASX: XJO) was off to a weak start on Wednesday, sliding 0.78% to a 3-month low of 7,241.8.

But the broader market suddenly picked up before noon, rallying more than 1.2% from intraday lows to 7,330 at the time of writing.

The uptick is likely in response to some positive news out of China’s embattled Evergrande Group.

ASX 200 jumps on Evergrande repayment announcement

According to Reuters, Evergrande Group’s main unit, Hengda Real Estate Group Co Ltd, said that it will make a bond interest repayment on Thursday, 23 September.

The coupon payment is said to be worth US$83 million with an initial issue size of around US$2 billion, according to CNBC.

Despite the small win, Evergrande will continue to face stress tests with another 7-year dollar bond due next Wednesday, 29 September.

The real estate conglomerate has seen its liabilities balloon to over US$300 billion and has already fallen behind in payments to stakeholders including banks, building suppliers and holders of investment products.

On 7 September, Fitch Ratings downgraded Evergrande’s credit rating from ‘CCC+’ to ‘CC’, suggesting “a default of some kind as probable.”

Energy and materials bounce back

ASX 200 energy and materials shares were the most hard hit when Evergrande headlines sparked panic across global equity markets at the beginning of the week.

The S&P/ASX 200 Materials (INDEXASX: XMJ) and S&P/ASX Energy (INDEXASX: XEJ) index tumbled 3.74% and 2.99% respectively on Monday.

Both sectors are bouncing back strongly on Wednesday, up around 2.5%.

The energy sector is largely green across the board, led by gains from heavyweights Woodside Petroleum Limited (ASX: WPL), Santos Ltd (ASX: STO) and Oil Search Ltd (ASX: OSH).

ASX 200 iron ore miners are finally welcoming some buying activity after iron ore prices slumped below US$100 a tonne for the first time in 14 months on Monday.

The BHP Group Ltd (ASX: BHP), Fortescue Metals Group Ltd (ASX: FMG) and Rio Tinto Limited (ASX: RIO) share prices are up between 2.58% and 5.63%.

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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