Markets Overview

  • ASX SPI 200 futures down 1.2% to 7,970.00
  • Dow Average down 1.5% to 40,936.93
  • Aussie down 1.2% to 0.6711 per US$
  • US 10-year yield fell 7.3bps to 3.8291%
  • Australia 3-year bond yield fell 1 bp to 3.60%
  • Australia 10-year bond yield fell 0.9 bps to 4.00%
  • Gold spot down 0.3% to $2,493.01
  • Brent futures down 5.0% to $73.63/bbl

Economic Events

  • 09:00: (AU) Aug. Judo Bank Australia PMI Servic, prior 52.2
  • 09:00: (AU) Aug. Judo Bank Australia PMI Compos, prior 51.4
  • 11:30: (AU) July Household Spending YoY, est. 3.3%, prior 3.1%
  • 11:30: (AU) July Household Spending MoM, est. 0.6%, prior -0.5%
  • 11:30: (AU) 2Q GDP YoY, est. 0.9%, prior 1.1%
  • 11:30: (AU) 2Q GDP SA QoQ, est. 0.2%, prior 0.1%

Stocks in Asia were poised for losses after US benchmarks posted their worst day since the Aug. 5 market meltdown, as concerns about growth and monetary policy combined to torch risky assets.

Equity futures were down across Australia, Hong Kong and Japan, pointing to losses of 3% in the Tokyo bourse. US contracts edged lower in early trading after the S&P 500 fell more than 2%, with Nvidia Corp. driving a plunge in tech stocks. Meanwhile, the yen jumped, a closely watched manufacturing gauge again missed forecasts, and oil sank on concern about tepid global demand.

Wall Street’s “fear gauge” – the VIX – soared. Treasury yields tumbled, with traders keeping their bets on an unusually large half-point Federal Reserve rate cut this year. A dollar gauge rose for a fifth session, its longest winning streak since April.

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

Traders are anticipating the Fed will reduce rates by more than two full percentage points over the next 12 months — the steepest drop outside of a downturn since the 1980s. The trepidation after the latest rise in unemployment will leave traders “on edge” until Friday’s payrolls data, said Ian Lyngen and Vail Hartman at BMO Capital Markets.

The S&P 500 dropped to around 5,530 while the Nasdaq 100 lost over 3% as Nvidia tumbled 9.5% — erasing $279 billion in a record one-day wipeout for a US stock. The US Justice Department sent subpoenas to Nvidia and other companies as it seeks evidence that the chipmaker violated antitrust laws.

US 10-year yields fell seven basis points to 3.83%. A record number of blue-chip firms tapped the corporate-bond market, taking advantage of cheaper borrowing. The yen climbed as Bank of Japan’s Kazuo Ueda reiterated the central bank will continue to raise rates if the economy and prices perform as expected.