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https://www.ft.com/content/952923b7-f421-407e-b14a-ad2ff190a134 Wall Street added to the global fall in equities on Monday as the liquidity crisis at Chinese property developer Evergrande shook stock markets in Asia, Europe and the US. The S&P 500 fell 1.7 per cent, marking its worst day of trading since May. It dropped as much as 2.9 per cent earlier on Monday, but recovered some of its losses in late afternoon trading. The sell-off hit the entire market, with just 50 stocks in the benchmark index finishing the day in the green. Energy stocks were the worst hit, along with financial groups and companies that produce basic materials. The technology-heavy Nasdaq Composite slid 2.2 per cent. The CBOE Volatility index, or Vix, which measures expected volatility on the S&P and is known as Wall Street’s “fear gauge”, hit a high of 28.8 — its highest level since May — before falling back to 25.7 Monday’s sell-off came after shares in Evergrande, the world’s most indebted property developer, closed 10 per cent lower in Hong Kong to hit their weakest level since May 2010. Concerns about the broader health of China’s real estate sector triggered a wider sell-off, sending the Hang Seng Property index, which tracks a dozen listed developers, down almost 7 per cent to its lowest point since 2016. At 24,099 points, Hong Kong’s broader Hang Seng index closed at its lowest level since October last year. Evergrande has obligations of more than $300bn to creditors and other businesses. An interest payment deadline on its offshore bonds looms on Thursday. US and global stock markets have repeatedly hit record highs this year, but had already begun to slip this month due to worries about slowing economic growth, the impact of the Delta coronavirus variant and the potential for central banks to begin withdrawing stimulus measures. David Donabedian, chief investment officer of CIBC Private Wealth, which manages about $92bn of investments, said: “There are some specifics to [Evergrande] that cause concern, but it also feeds a general narrative . . . The potential fall of a major company in a major industry feeds that perception that the Chinese economy and global economic recovery could be further slowed.” Line chart of showing Evergrande shares close at lowest level since 2010 Evergrande’s share price has tumbled since it warned of the risk of default last month. The company said senior executives would suffer “severe punishment” after securing early redemptions on investment products it later told retail investors that the company could not repay on time. Trading in Hong Kong indicated that the deepening fears for the property sector were dragging on other developers and financial institutions. Johan Grahn, vice-president and head of exchange traded funds at Allianz IM, said he expected the direct impact of Evergrande’s woes to be limited in the US, but said the trouble was “almost like the straw that broke the camel’s back” after weeks of rising concerns. “If you’ve been thinking about taking some chips off the table for a long time, today looks like a good day to actually take action,” Grahn said. “The big question is going to be whether we will see the dip buying continue, or if it is going to be a longer downdraught.” Like US stocks, European markets also dropped on Monday, with the region-wide Stoxx 600 falling 1.7 per cent. In debt markets, the yield on the 10-year US Treasury note, which moves inversely to its price, dropped 0.05 percentage points to 1.31 per cent, driven by haven-buying. Germany’s equivalent Bund yield slipped 0.04 percentage points to minus 0.32 per cent. The gloomy sentiment also dragged down the value of corporate debt. A widely watched ETF that tracks lower-rated, “high-yield” bonds and is known by its ticker HYG dipped 0.4 per cent in US afternoon trading, on course for its worst one-day decline in two months. The cost of insuring high-yield debt from default in the derivative markets also rose sharply, in a further sign of investor nervousness. “Evergrande is just the tip of the iceberg,” said Louis Tse, managing director at Wealthy Securities, a Hong Kong-based brokerage. Chinese developers were under substantial repayment pressure on dollar-denominated bonds, he added, while financial markets had grown nervous that Beijing would push listed real estate groups to cut the costs of housing in mainland China and Hong Kong. “That affects the banks as well — if you have lower property prices what happens to their mortgages?” Tse said. “It has a chain effect.” Recommended ExplainerEvergrande Real Estate Group Ltd Evergrande liquidity crisis: why the property developer faces risk of default Shares in Ping An, China’s biggest insurer, fell as much as 8.4 per cent on Monday, after closing down