Growth fears, tech slump cause September squeeze By Reuters

By Jamie McGeever

(Reuters) – A look at the day ahead in Asian markets.

Global markets will open on a very shaky foot on Wednesday after a bleak picture of US factory activity rekindled fears of a “soft landing” for the US economy on Tuesday and sent stocks, oil prices and bond yields sharply lower.

It was the first day of September trading for US markets after the Labor Day holiday weekend, and for those who pay more attention to “seasonal” factors, it’s an ominous start to what is traditionally a weak month for stocks and risk appetite.

Many of Tuesday’s market moves were the biggest since the outbreak of historic volatility on Aug. 5 — Wall Street, global stocks and Treasury yields posted their biggest declines, and U.S. stock volatility saw its biggest increase of the day.

Others were even more overt and ominous.

Oil fell 5 percent, its biggest drop this year and a reflection of investor concerns about growth in the U.S. and China. If demand and economic activity falter in the world’s top two economies, Houston, we have a problem.

Additionally, Nvidia (NASDAQ: ) shares fell 10%, wiping about $265 billion from the company’s value in one of the biggest one-day market cap losses on record. If Nvidia has been responsible for much of the stock’s tech- and AI-fueled rise over the past 18 months, a selloff of this magnitude is a concern.

Weak PMI data from China and the United States set the negative tone, and there are several Asia-Pacific PMI reports scheduled for release on Wednesday, including China’s “unofficial” Caixin services PMI.

China’s “official” PMI figures from Beijing at the weekend showed manufacturing activity fell to a six-month low in August as factory-gate prices fell and owners scrambled for orders. Shares in Shanghai open at seven-month lows on Wednesday.

Australian GDP figures are also available on Wednesday. Economists polled by Reuters forecast second-quarter growth accelerating to 0.3 percent from 0.1 percent on a quarterly basis, but year-on-year growth was broadly flat at 1.0 percent.

After the broad and aggressive sell-off in US stocks on Tuesday, Asian markets will almost certainly open in the red on Wednesday – the old adage still stands: when the US catches a cold, the rest of the world sneezes.

Figures from the Institute for Supply Management show that US manufacturing activity has contracted in every month since October 2022 except March this year. That’s almost two years of uninterrupted manufacturing recession.

That was offset by an expansion in services activity, but rate traders now see a nearly 40 percent chance the Fed will begin its easing cycle later this month with a 50 basis point cut.

Here are the key developments that could provide more direction for Asian markets on Wednesday:

– China “unofficial” services Caixin PMI (August)

– Australia GDP (Q2)

– South African President Ramaphosa’s state visit to China