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Global stocks steady after Wall Street drop unsettles Asia

US stock futures advanced and European markets opened with small gains. Nasdaq futures were up 0.4%, rebounding from a difficult trading session on Monday that saw the tech-heavy index shed 2.1%.

Investors have been unnerved by dysfunction in Washington, where lawmakers have made little progress on allowing the US government to keep borrowing to pay its bills. The US Treasury has said it will default if the debt ceiling isn’t hiked by October 18.

Rising oil prices also played into Monday’s stock retreat. OPEC and allied producers including Russia said Monday that they would hike output by 400,000 barrels per day in October and November, defying growing pressure for them to pump even more to ease a global energy crunch.

US oil prices gained more than 2% to $77.62 per barrel, closing at their highest level since 2014. The price of energy has risen sharply in recent months along with a broad range of commodities, fueling inflation fears among investors.

Investors have reacted to higher prices by selling government bonds, which pushes yields higher and tends to hurt tech stocks. When yields on government bonds are low, it boosts interest in riskier investments that offer better returns.

Twitter (TWTR) and Facebook were among the worst performers on the S&P 500 on Monday. Facebook (FB) lost nearly 5% — hurt by a major outage across its platforms and revelations from whistleblower Frances Haugen about its business. The stock could come under more pressure on Tuesday when Haugen testifies before Congress.

The US selloff and worries about China’s property market unsettled Asian stocks on Tuesday.

Japan’s benchmark Nikkei (N225) slid as much as 3.5%, taking the drop from recent record highs to 10%, which put the market briefly in a correction. It later pared losses to 2.2%. Hong Kong’s Hang Seng Index (HSI) reversed early losses to eke out a small gain, despite renewed losses for real estate stocks.

Investors are worried about embattled Chinese property developer Evergrande, which has likely missed two bond payment deadlines in recent weeks. It’s hunting for buyers for some of its businesses as it battles to survive a cash crunch.

And there are signs of more trouble in the vast Chinese real estate sector. Fantasia Holdings, another developer, announced late Monday that it missed repaying a maturing bond. The company’s shares were halted from trading on Tuesday.

Shares in Country Garden Holdings, China’s second largest developer by sales, lost 2.8%. Its property management unit — Country Garden Services — dropped 3.2% separately, after the firm said that Fantasia had failed to repay a company loan and it was “probable” Fantasia would default on that payment.