This week's global markets update highlights the significant declines in U.S. stock indexes amid concerns over an economic slowdown, mixed economic data from Europe, Japan, and China, and key developments in other markets such as Poland and Chile. The article also covers the latest economic indicators and their potential impact on future monetary policies.
United States
Slowdown Worries Weigh on Stocks
- The S&P 500 Index experienced its worst weekly drop in 18 months.
- Information technology shares led the declines, notably NVIDIA, due to antitrust investigation rumors.
- Energy shares were weak due to declining oil prices, while defensive sectors like utilities, consumer staples, and real estate held up better.
- September has historically been a challenging month for stocks, with the S&P 500 declining significantly in recent years.
- Trading volumes increased as investors returned from the summer vacation season.
Economic Calendar Surprises on the Downside
- The Institute for Supply Management reported continued contraction in U.S. manufacturing activity.
- Labor Department data showed job openings fell to their lowest level since January 2021.
- ADP reported a low increase in private payrolls for August.
- The official payroll report showed employers added 142,000 jobs in August, below expectations.
- Unemployment rate decreased from 4.3% to 4.2%, and average hourly earnings rose 0.4%.
Market Indexes Changes
- DJIA: 40,345.41 (-1217.67, 7.05% YTD)
- S&P 500: 5,408.42 (-239.98, 13.39% YTD)
- Nasdaq Composite: 16,690.83 (-1022.79, 11.19% YTD)
- S&P MidCap 400: 2,939.41 (-152.11, 5.68% YTD)
- Russell 2000: 2,091.41 (-126.22, 3.17% YTD)
Record-Breaking Day in Corporate Bond Issuance
- Tuesday saw a record number of issuers (27) in the investment-grade corporate bond market.
- Total volume reached USD 43 billion across 52 tranches.
- The high yield market also saw increased new issues and volumes.
Europe
- The STOXX Europe 600 Index ended 3.52% lower, with major stock indexes in France, Germany, Italy, and the UK also falling.
- ECB Governing Council members indicated a likely rate cut in September, with mixed views on further cuts.
- German manufacturing orders increased unexpectedly, but industrial output fell more than expected.
- The ifo Institute and IfW Kiel Institute lowered growth forecasts for Germany.
Japan
- The Nikkei 225 Index fell 5.8%, and the TOPIX Index lost 4.2%.
- Semiconductor stocks tracked a U.S.-led sell-off, and yen strength posed a headwind for export-oriented companies.
- Japan's real wages grew 0.4% year on year in July, supporting the case for further rate hikes.
- Household spending remained sluggish despite solid income growth.
China
- Chinese equities declined, with the Shanghai Composite Index down 2.69% and the CSI 300 down 2.71%.
- The official manufacturing PMI slipped to 49.1 in August, while the nonmanufacturing PMI edged up to 50.3.
- The Caixin/S&P Global survey showed manufacturing activity expanded to 50.4, but the services PMI fell to 51.6.
- New home sales by top developers fell 26.8% in August year on year.
Other Key Markets
Poland
- The Polish central bank kept its key interest rate at 5.75% due to wage growth and energy costs.
- Poland's economic recovery continues, with low unemployment and high wage growth.
Chile
- The central bank reduced its monetary policy interest rate by 25 basis points to 5.50%.
- Policymakers believe the recent increase in inflation is due to a one-off supply shock.
- Consumer demand and non-mining investment are softening, which could bring inflation back down sooner.
