New York (AFP)

The New York Stock Exchange opened sharply lower on Monday, shaken by the consequences of a possible collapse of Chinese real estate giant Evergrande at the start of a key week for the markets with the monetary meeting of the US Central Bank (Fed ).

At 14:10 GMT, the Dow Jones index dropped 1.44%, the Nasdaq, with a strong technological concentration, lost 1.67%.

The broader S&P 500 index fell 1.49%.

Friday, the Dow Jones index had lost 0.48% to 34,584.88 points.

The Nasdaq fell 0.91% to 15,043.97 points, as did the broader S&P 500 index fell to 4,432.99 points.

The three main indices had given up a little ground during the week.

"Several factors are precipitating the liquidation," commented Patrick O'Hare of Briefing.com citing the collapse of Evergrande and "growing angst" around the debt ceiling of the United States.

"The commotion in real estate in China continues to shake world markets," noted Chris Low, chief economist at FHN Financial, for his part.

"Evergrande has to pay interest this week and chances are the company can't afford it," the analyst recalled as the stock prices of other real estate developers also fell and investors fear contagion for the entire sector.

The bankruptcy real estate developer's share price plunged 17% on Monday in Hong Kong and nearly 90% from the start of the year.

Sign of the concern of operators, the market volatility index, the VIX, also known as the "fear index" jumped to 26%, its highest level since May.

All of the eleven sectors of the S&P started off strongly in the red.

Financials were hit by a drop of 2.31%, in the wake of a drop in bond yields.

Wells Fargo, Citi, Bank of America, Goldman Sachs all dropped more than 3% at the start of the session.

The energy sector was at half mast, yielding 3.20%, in the wake of lower oil prices.

Exxon, Chevron dropped more than 2%.

Materials, a sector very responsive to developments in the Chinese market, also suffered sharp declines (-2.07%).

The American mining giant, specialist in copper, Freeport-McMoran melted 5.30% to 31 dollars.

Sign of avoidance of risky assets, bitcoin dropped 8% to 43,819 dollars, its lowest level in a month and a half while the dollar played its role of safe haven climbing to a high in one month against the euro and major currencies.

In addition to concerns over the fate of the ultra-indebted Chinese promoter, there were concerns over the standoff in Congress over the US debt ceiling and the Central Bank (Fed) monetary meeting which begins on Tuesday.

- Risk of "historic" crisis -

Treasury Secretary Janet Yellen published a vigorous editorial in the Wall Street Journal arguing for raising the debt ceiling, blocked in Congress, at the risk of causing "a historic financial crisis".

"The default could trigger a surge in interest rates, a sharp drop in stock prices and other financial turmoil," warned Finance Minister Joe Biden.

"There is growing anxiety that Congress has not yet raised the debt ceiling," said Patrick O'Hare.

The markets were also preparing to follow the monetary meeting of the Fed which begins Tuesday, with new forecasts in the key and the hope of clues on the timing of a reduction in monetary support.

Yields on 10-year bonds in the bond market fell to 1.32% from 1.36% at the previous close as investors sought safe assets.

On the side, the drop also affected the big names in tech, from Amazon (-1.70%) to Tesla (-3.19%) via Facebook (-1.57%) and Alphabet (Google, -2%).

Rare titles to have a smile, those of the airlines welcomed reports that the Biden administration is preparing to reopen the borders to vaccinated European travelers.

American Airlines gained 1.32% to 19.98 dollars.

© 2021 AFP