Start of the traditional September decline in the markets? Fundamental trading news
Market reviews
• U.S. and European markets are set for a rocky start on Wednesday after Asian shares fell into the red on renewed worries about the global growth outlook and another sharp rise in artificial intelligence prices .
U.S. and European stock futures fell, while MSCI's broadest index of Asia-Pacific shares outside Japan and Japan's Nikkei are headed for their worst performance since Aug. 5, when concerns about a slowing U.S. economy and the unwinding of the Japanese yen as a carry trade battered global stock markets.
• September is traditionally a bad month for stocks, and U.S. investors appear keen to continue that pattern after Wall Street slid after the Labor Day holiday. Analysts say there’s no single reason for the latest market rout. It could be blamed on tepid U.S. manufacturing data, but could also be overshadowed by China’s shaky economic recovery and Nvidia’s record sell-off. The AI favorite’s $279 billion wiped off its market value sent tech stocks in Asia reeling on Wednesday, with Japanese chip testing equipment maker Advantest, a Nvidia supplier, tumbling 7%. Taiwan’s TSMC fell 4%.
• Oil hit by demand worries: In commodities, concerns about slowing global demand sent oil prices tumbling to their lowest in nine months. China's CNOOC Ltd led the decline among Hong Kong-listed oil stocks, also on track for its biggest one-day percentage drop since Aug. 5.
• There appears to be further turmoil in markets, with U.S. job openings data due later on Wednesday expected to provide insight into the state of the labor market. However, the focus remains on Friday's U.S. nonfarm payrolls report for August, which could determine whether the Federal Reserve's expected rate cut this month is routine or outsized. Until then, investors will need to tread carefully, and the sell-off now underway may not be the last.
• UAE oil major Adnoc is preparing to make its bond market debut after more than two years of waiting.
The company has begun a two-day roadshow and plans to issue debt with maturities of 5, 10 and 30 years.
• Traders brace for euro weakness - Bloomberg Options traders are bracing for a weaker euro as the currency's rally to a one-year high may run out of steam. The euro's gains are already slowing.
• Elon Musk and his company xAI have launched a super-powerful artificial intelligence system called Colossus. This system, consisting of 100 thousand H100 graphics processors, has become the world's most powerful AI training platform. The project was implemented in collaboration with Nvidia.
• Tesla plans to build six-seat Model Y in China from late 2025 - Reuters. The company has told suppliers to prepare for a double-digit increase in Model Y production at its Shanghai gigafactory, the company said. The addition of the six-seat variant underscores Tesla's push to strengthen its position against rivals in China, where the Model Y competes with Nio's Onvo L60 and Zeekr's 7X.
• Criminal proceedings have begun in Germany against the former head of Volkswagen. The former top manager of the concern, Martin Winterkorn, faces up to several years in prison in connection with the “diesel scandal” that broke out back in 2015.
• Moody's has improved its outlook on global reinsurers to positive from stable, reflecting higher prices and more restrictive policies from reinsurers, as well as healthy investment income, the ratings agency said in a statement on Tuesday.
• UK's first new bond sale meets record demand - Bloomberg. Britain received more than 110 billion pounds ($144 billion) in orders for a new bond sale on Tuesday, showing that investor appetite for government debt remains strong after Labour took power.
• Nokia signs deal with AT&T to build fiber-optic network. U.S. telecom operator AT&T and Finnish network equipment maker Nokia have signed a deal to build a fiber-optic network in the United States, the Finnish company said on Tuesday. The deal comes after Nokia lost a major deal with AT&T to its Swedish rival Ericsson.
• Intel's Dow status at risk as shares fall Intel was one of the first two tech companies to join the Dow Jones Industrial Average during the dot-com era of 1999, along with Microsoft. Now a fall in its share price could cost the U.S. chipmaker its place on the blue-chip index.
• A Dutch regulator is considering whether to hold executives of Clearview AI personally liable. The controversial US facial recognition startup that created a searchable database of 30 million images populated by searching the internet for people's selfies without their consent has been hit with Europe's biggest privacy fine.
• Apple to switch to OLED displays for all future iPhones from 2025 - Nikkei Apple will use organic light-emitting diode (OLED) displays for all iPhone models sold in 2025 and later, ditching liquid crystal displays (LCDs) entirely.
• Goldman Sachs exited its long-term bullish position on copper and cut its 2025 price forecast by nearly $5,000, citing weakening demand in China.
• Morgan Stanley's Wilson says laggards need to catch up. The Morgan Stanley strategist who predicted a market correction last month says stocks that have lagged the rally in U.S. markets could get a boost if data due Friday provides further evidence of economic resilience.
• The tourism industry will contribute a record $11 trillion to global GDP in 2024. A record $1 in every $10 spent globally in 2024 will be spent on travel as people book hotels, cruises and flights, according to an annual report from the World Travel & Tourism Council, a nonprofit membership organization.
Brent crude fell below $75 a barrel for the first time since January 3, as new data from China fueled concerns that economic growth in one of the world's biggest oil consumers is unlikely to resume this year. Libya has also resumed oil production.
• Electric car sales in Norway hit record high, taking 94% of market share. Electric car registrations in Norway rose to a record in August 2024, led by Tesla's Model Y. About 94% of the 11,114 cars sold in August were electric, according to the Norwegian Road Federation (OFV). The boom has been fueled by generous tax incentives.
Electric car owners are also allowed to use bus lanes and have parking benefits.
• The US Department of Justice has issued a subpoena to Nvidia (NVDA) in connection with an antitrust investigation against NVDA.
• Stocks in the morning after reports
GTLB +16%
PD -12%
ASAN -13%
ZS -15%
September started with a sell-off in stocks. Semiconductors led the way, led by NVDA (-9.5%). The latter lost $279 billion in capitalization, the largest single-day loss in capitalization in the history of the U.S. stock market. Defense stocks held up well.
Key events that could impact markets on Wednesday:
France HCOB Services PMI (August).
Germany HCOB Services PMI (August).
Eurozone Producer Prices (July).
US JOLTS Jobs (July).
International Reviews
• US business activity indices confirm fears of an economic slowdown.
PMI fell in August from 49.6 to 47.9 (expected 48).
ISM rose from 46.8 to 47.2 (expected 47.5).
• Kamala Harris plans to propose on Wednesday a tenfold increase in the federal tax credit for small business start-up costs
from $5,000 to $50,000, hoping it will help spur a record 25 million new filings by small businesses.
• Vice President Kamala Harris has widened the gap with former President Donald Trump among women, with an ABC News/Ipsos poll showing
Harris leading 54 percent to Trump's 41 percent.
Harris led Trump among that demographic by 6 percentage points last month.
• Britain has partially suspended arms sales to Israel - Politico. Foreign Secretary David Lemmy said the deal involved about 30 of the roughly 350 exports: parts for fighter jets, helicopters, drones, ground-based guidance systems and the like.
Britain concluded there was a real risk that the weapons could be used in violation of international humanitarian law.
• Houthis have attacked two oil tankers in the Red Sea. The MV Blue Lagoon I and MV Amjad were damaged in the Houthi attack, the US Central Command said. The ships were sailing in the Red Sea under the flags of Panama and Saudi Arabia. One of them was carrying about 2 million barrels of oil.
• Construction spending fell more than expected. Construction spending fell 0.3% in July, compared with the previous month, when it was unchanged. Forecasts had called for spending to fall only 0.1%. The slightly larger-than-expected drop in spending reflects high mortgage rates and greater supply.
• China launches anti-dumping investigation against goods from Canada. On imports of rapeseed and chemical products.
• US authorities have arrested former New York State Representative Linda Sun on charges of acting as an unregistered foreign agent for the Chinese government.
• Venezuelan dictator Maduro has decided to declare Christmas on October 1st, trying to divert attention from his election defeat and illegal seizure of power by force. Meanwhile, a Venezuelan court has issued an arrest warrant for the opposition winner of the election.