Stocks fall most since August rout, oil slides: Markets end

(Bloomberg) — Asian shares tumbled the most since an Aug. 5 decline, tracking U.S. peers sales caused by a decline in Nvidia Corp .

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Shares in Asian chipmakers fell amid renewed concerns about the artificial intelligence frenzy, sending a regional gauge of shares down more than 2 percent. Chip giants Taiwan Semiconductor Manufacturing Co. and SK Hynix Inc. were down at least 4% each. U.S. futures also fell in Asian trade after the S&P 500 fell more than 2 percent.

The general risk reduction came as a closely watched gauge of US manufacturing again missed forecasts, shifting investors’ attention to the chances of an economic slowdown in the world’s largest economy. This added to an already weak sentiment in Asia, where a series of disappointing data from China weighed on risk assets.

“The magnitude of that August 5 move probably burned more than a few and it’s hard to get over those memories, especially as the hard landing versus soft landing confusion is still unresolved,” said Charu Chanana, head of FX strategy at Saxo Markets in Singapore . . “I would be quite cautious here,” as weak data will raise recession concerns, while positive data will ease rate cut expectations, she added.

Treasury yields steadied after falling on Tuesday. A greenback snapped a five-day winning streak, its longest since April. The yen edged higher. Oil fell on Tuesday after falling nearly 5% amid concerns over weak demand and oversupply.

Elsewhere in Asia, the Australian dollar pared losses as data showed Australia’s economic weakness persisted in the three months to June.

Chinese shares fell after a private survey showed services activity expanded less than expected, the latest sign of the economy’s fragility.

The S&P 500 and Nasdaq 100 had their worst September starts since 2015 and 2002, respectively. With inflation expectations anchored, attention turned to the health of the economy as signs of weakness could accelerate policy easing. While interest rate cuts tend to bode well for stocks, that’s usually not the case when the Fed is rushing to prevent a recession.

Wall Street’s “fear gauge” – the VIX – has risen.

“The tough sell-off on Wall Street was a stark reminder that September has a bad reputation for faltering risk appetite,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore, adding that the situation may be exacerbated by US recession risks and the unfolding of the yen carry trade.

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Traders expect the Federal Reserve to cut rates by more than two percentage points over the next 12 months – the steepest drop outside of a recession since the 1980s.

Marking the start of a busy week for economic data, a report showed that US manufacturing activity fell in August for a fifth month. The focus will be on the key US jobs report due this week. The data is expected to show that wages in the world’s largest economy rose by about 165,000, based on the average estimate in a Bloomberg survey of economists.

“This week’s jobs report, while not the only determinant, will likely be a key factor in the Fed’s decision between a 25 or 50 basis point cut,” said Glenmede’s Jason Pride and Michael Reynolds. “Even modest signals from this week’s jobs report could be a key decision point on whether the Fed takes a more cautious or aggressive approach.”

The S&P 500 fell to around 5,530, while the Nasdaq 100 lost more than 3 percent as Nvidia fell 9.5 percent — wiping out $279 billion in a record one-day loss for a U.S. stock. The US Department of Justice has issued subpoenas to Nvidia and other companies as it seeks evidence that the chipmaker violated antitrust laws.

Key events this week:

• Eurozone HCOB services PMI, PPI, Wednesday

• Canada tariff decision on Wednesday

• US Posts, Factory Orders, Beige Book, Wed

• Eurozone retail sales on Thursday

• US Initial Jobless Claims, ADP Employment, ISM Services Index, Thursday

• Eurozone GDP, Friday

• US non-farm payrolls on Friday

• The Fed’s John Williams speaks on Friday

Some of the main movements in the markets:

Stocks

• S&P 500 futures were down 0.4% as of 11:12 a.m. Tokyo time

• Japan’s Topix down 3%

• Australia’s S&P/ASX 200 fell 1.8%

• Hong Kong’s Hang Seng fell 1.7%

• Shanghai Composite fell 0.7%

• Euro Stoxx 50 futures fell 0.9%

• Nasdaq 100 futures fell 0.6%

Coins

• The Bloomberg Dollar Spot Index fell 0.1%

• The euro was little changed at $1.1053

• The Japanese yen rose 0.1 percent to 145.27 per dollar

• The offshore yuan rose 0.1 percent to 7.1134 per dollar

• The Australian dollar fell 0.2% to $0.6698

Cryptocurrencies

• Bitcoin fell 2.7% to $56,669.73

• Ether fell 4% to $2,365.42

BONDS

• The 10-year Treasury yield was little changed at 3.83%

• Japan’s 10-year yield fell 3.5 basis points to 0.885%

• Australia’s 10-year yield fell six basis points to 3.94%

commodities

This story was produced with the help of Bloomberg Automation.

–With assistance from Rob Verdonck and Joanna Ossinger.

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