- US stocks slumped on return from the Labor Day weekend with the Nasdaq underperforming amid a pronounced weakness in the tech sector.
- The Tech losses were led by downside in chips, with AI-darling NVIDIA (NVDA) falling 9.5% in the first trading session of September, before shedding another 2.4% after-market on a DoJ subpoena.
- APAC stocks traded with losses across the board following the dire session on Wall Street, which saw a tech rout led by downside in chips, with a similar picture seen in APAC with the likes of SK Hynix opening lower by over 9%.
- European equity futures are indicative of a lower open with the Euro Stoxx 50 future -1.3% after cash closed -1.2% on Tuesday.
- Looking ahead, highlights include EZ, UK PMIs (F), US International Trade, US Durable Goods, JOLTS Job Openings, BoC & NBP Policy Announcement, ECB’s Elderson; BoC Governor Macklem & Rogers, and Supply from Germany. Earnings from Direct Line, Barratt Developments, Dollar Tree, Hewlett Packard, Hormel Foods
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US TRADE
EQUITIES
- US stocks slumped on return from the Labor Day weekend with the Nasdaq underperforming amid a pronounced weakness in the tech sector. The Tech losses were led by downside in chips, with AI-darling NVIDIA (NVDA) falling 9.5% in the first trading session of September, before shedding another 2.4% after-market on a DoJ subpoena.
- Energy and Communication names also underperformed, while the defensive sectors, Consumer Staples, Real Estate, and Utilities outperformed.
- SPX -2.12% AT 5,529, NDX -3.15% at 18,959, DJIA -1.51% at 40,937, RUT -3.09% at 2,149
- Click here for a detailed summary.
NOTABLE HEADLINES
- NVIDIA (NVDA) gets DoJ subpoena in escalating antitrust investigation, according to Bloomberg. NVIDIA (NVDA) responded to the DoJ subpoena and said customers can choose whatever solution is best.
- A Telegraph poll of swing states predicts for the first time that Harris will win the US Presidential Election.
- Atlanta Fed GDPnow (Q3): 2.0% (prev. 2.5%).
APAC TRADE
EQUITIES
- APAC stocks traded with losses across the board following the dire session on Wall Street, which saw a tech rout led by downside in chips, with a similar picture seen in APAC with the likes of SK Hynix opening lower by over 9%.
- ASX 200 saw losses led by miners and tech following a similar sectoral picture stateside, whilst the downside was somewhat cushioned by heavyweight healthcare and telecoms. The index extended on losses after the QQ GDP miss.
- Nikkei 225 felt a double-whammy from the tech-led downside coupled with the stronger JPY, with the index slipping under 38k and eventually 37k from a 38,728.50 close on Tuesday.
- Hang Seng and Shanghai Comp also fell victim to the regional losses, with the former seeing its large-cap oil names with the deepest losses, whilst the mainland saw shallower losses. Caixin Services PMI deteriorated, but accompanying commentary was rosier.
- US equity futures continued to edge lower after the slump seen during Wall Street hours, which saw no obvious catalysts.
- European equity futures are indicative of a lower open with the Euro Stoxx 50 future -1.3% after cash closed -1.2% on Tuesday.
FX
- DXY traded within tight ranges after the index edged higher on Wall Street after the US ISM Manufacturing data, but closed off best levels and around mid-range of a 101.58-91 Tuesday parameter.
- EUR/USD saw flat trade currency took a breather from the prior day's volatility, which saw the pair fall from a 1.1072 peak to a 1.1025 low before closing at 1.1043.
- GBP/USD experienced another uneventful overnight session amid a lack of pertinent catalysts for the GBP. The pair briefly lost 1.31+ status on Tuesday to print a 1.3084-1.3149 range. The pair found support at 1.3100 overnight.
- USD/JPY held a downward bias as JPY stood as the outperformer, with APAC traders reacting to Tuesday's strength alongside the slide in US bond yields. Additionally, the broader risk aversion kept demand for the JPY ample.
- Antipodeans were lower as the soured risk tone spilt over from Wall Street to APAC. AUD saw no reaction to mixed PMI and AIG data, whilst GDP ultimately led to a couple of upticks, albeit at a time when risk was coming off worst levels. Meanwhile, newsflow for the Kiwi has been quiet, with the currency moving in tandem with risk.
- PBoC set USD/CNY mid-point at 7.1148 vs exp. 7.1167 (prev. 7.1112)
FIXED INCOME
- 10-year UST futures held an upward bias amid the APAC risk aversion after T-notes rallied across the curve on Tuesday despite record corporate issuance with peaks seen after the headline ISM Manufacturing PMI and Construction Spending missed estimates.
- Bund futures posted mild gains due to broader debt demand during risk aversion, with traders also looking forward to a dual Bund auction (1.0% 2038 and 2.6% 2041) during the Wednesday European session.
- 10-year JGB futures played catchup to the bond action in western counterparts on Tuesday, with the contract rising from a 144.36 low to a 144.88 peak.
COMMODITIES
- Crude futures saw another session after Tuesday's slide was driven by a slew of bearish catalysts, such as Libya headlines and refineries coming back online. In addition, the continued downbeat sentiment regarding sluggish growth in China remains, following the latest batch of economic data. No move was seen on the Caixin Services PMI.
- Spot gold was flat and resided in a narrow range and well within Tuesday's volatile USD 2,472.60-2,506.19/oz parameter.
- Copper futures took a breather after yesterday's slide which saw 3M LME prices under USD 9,000/t, with the contract trading on either side of the psychological level overnight.
- Libya legislative bodies agree to appoint a central bank governor within 30 days following UN-sponsored talks, via a statement from representatives of legislative bodies.
- Goldman Sachs highlights "that AI may eventually weigh on oil prices over the next decade by boosting oil supply". GS sees roughly 30% of the costs of a new shale well could potentially be reduced by AI, resulting in a roughly USD 5/bbl fall in the marginal incentive price. A hypothetical AI-catalyzed 10-20% jump in the very low recovery factors of US shale could increase oil reserves by 8-20% (10-30bln bbls). GS estimate a relatively modest potential AI boost to oil demand via higher incomes of +0.7 MB/D over the next 10 years.
CRYPTO
- Bitcoin saw substantial downside volatility overnight and briefly breached USD 56k to the downside according to some vendors.
NOTABLE ASIA-PAC HEADLINES
- Bank of America cut its 2024 China GDP forecast to 4.8% (prev. 5.0%).
- Japan's Chief Cabinet Secretary Hayashi said closely watching domestic and overseas market moves with a sense of urgency; will conduct fiscal and economic policy management while working closely with BoJ; Important to make assessment of market moves calmly.
- PBoC injected CNY 700mln via 7-day Reverse Repo at a maintained rate of 1.70%
DATA RECAP
- Chinese Caixin Services PMI (Aug) 51.6 (Prev. 52.1); Compose 51.2 (Prev. 51.2); Caixin said “Market optimism was retained. Businesses expressed confidence in further market improvement, keeping the corresponding gauge in positive territory. But it was still below the historical average, indicating the optimistic sentiment needed to be strengthened."
- Australian Real GDP QQ SA (Q2) 0.2% vs. Exp. 0.3% (Prev. 0.1%)
- Australian Real GDP YY SA (Q2) 1.0% vs. Exp. 1.0% (Prev. 1.1%, Rev. 1.3%)
- Australian Real GDP YY SA (Q2) 1.0% vs. Exp. 1.0% (Prev. 1.1%)
- Australian GDP Chain Price Index (Q2) -0.9% (Prev. 0.8%)
- Australian Final Consumption Exp QQ SA (Q2) 0.3% (Prev. 0.6%)
- Australian Gross Fixed Capital Exp SA (Q2) -0.1% (Prev. -0.9%)
- Australian Judo Bank Composite PMI Final (Aug) 51.7 (Prev. 51.4)
- Australian Judo Bank Services PMI Final (Aug) 52.5 vs. Exp. 52.2 (Prev. 52.2)
- Australian AIG Manufacturing Index (Aug) -30.8 (Prev. -19.5)
- Australian AIG Construction Index (Aug) -38.1 (Prev. -23.2)
GEOPOLITICS
MIDDLE EAST
- "Estimates that Washington will present its new plan for the exchange deal by Friday", according to Sky News Arabia citing Walla News.
- Israeli Broadcasting Authority said Israeli officials informed mediators of Tel Aviv's approval to withdraw from the Philadelphi corridor in the second phase of the deal, via Sky News Arabia.
- "US military announces destruction of Houthi missile system in area under their control in Yemen", according to Sky News Arabia.
RUSSIA-UKRAINE
- Ukraine's air defence engaged in repelling the second wave of Russian air attacks on Kyiv overnight, according to the country's military; engaged in repelling a drone attack on the western city of Lviv, near the Polish border.
- Poland activated aircraft to ensure airspace security for the third time in eight days after Russia launched strikes on Ukraine, according to Polish armed forces.
- Russia's Kremlin said Russia takes into account that Ukraine "will" use US long-range weapons in its attacks deep into Russian territory.
- Russia's Kremlin said work on changing Russia's nuclear doctrine is caused by actions of the West, according to Ria.
OTHER
- Russia and China are working on President Xi's participation in the BRICS summit in Russia's Kazan, according to Ria.
- US will lead a delegation to Xiangshan Forum in Beijing, according to Chinese state media.
- Russia's Kremlin does not expect fundamental changes after the US election.
EU/UK
NOTABLE HEADLINES
- ECB's Nagel said the great wave of inflation is over, but he will not commit in advance on whether he will vote for an interest rate cut in September, via Faz.
- ECB's Kazaks said the ECB can take steps to lower rates at the next meeting; pace of wage growth is slowing; says we can lower rates but must remain cautious.
- ECB's Cipollone said investment remains weak, which suggest that firms do not believe a strong recovery, via Le Monde; broadly on track to for inflation; data so far confirms our direction of travel and hopes that this will allow the ECB to continue to be less restrictive. Adds, there is a real risk that the stance could become too restrictive.
DATA RECAP
LATAM
- Chilean Interest Rate (Sep) 5.5% vs. Exp. 5.5% (Prev. 5.75%); decision unanimous.
