Hang Seng Index and Nikkei 225 Tumble Amid US and Chinese Economic Uncertainty

US Equity Markets Tumble as September Kicks Off

On Tuesday, September 3, the US equity markets suffered heavy losses as crucial US economic data looms.

The Nasdaq Composite Index plunged 3.26%, while the Dow and the S&P 500 saw declines of 1.51% and 2,12%, respectively. Notably, NVIDIA (NVDA) slid by 9.53%, leading the Nasdaq deep into negative territory. News of the US Justice Department seeking evidence that Nvidia and other chip companies have violated antitrust laws fueled the sell-off.

US Economic Calendar: Manufacturing PMI Shakes Investor Confidence

On Tuesday, weaker-than-expected manufacturing data triggered a flight to safety. The S&P Global Manufacturing PMI fell from 49.6 in July to 47.9 in August, down from a preliminary 48.0.

The PMI raised the fear of a possible hard US economic landing. However, this week’s Services PMI and labor market data will likely have more impact on market risk sentiment.

Expert Views on the US Economy

S&P Global Market Intelligence Chief Business Economist Chris Williamson remarked on the August survey, stating,

“A further downward lurch in the PMI points to the manufacturing sector acting as an increased drag on the economy midway through the third quarter. Forward-looking indicators suggest this drag could intensify in the coming months.”

Tuesday’s US equity market sell-off set the tone for the Wednesday Asian session.

China’s Services PMI Unexpectedly Dips

On Wednesday, China’s Caixin Services PMI unexpectedly fell from 52.1 in July to 51.6 in August. The weaker-than-expected numbers further impacted buyer demand for riskier assets. In response, the Hang Seng Index fell to a session low.

Australia’s Disappointing GDP Growth

The Australian economy expanded by 0.2% quarter-on-quarter in Q2 2024, mirroring growth in Q1 2024. Notably, household spending declined by 0.2% in the quarter, detracting 0.1 percentage points from GDP.

ABS Head of National Accounts Katherine Keenan commented,

“Excluding the COVID-19 pandemic period, annual financial year economic growth was the lowest since 1991-92 – the year that included the gradual recovery from the 1991 recession.”

Hang Seng and Mainland China Follow the US Lead

The Hang Seng Index declined by 1.18% on Wednesday morning, tracking the US equity markets into negative territory. Real estate and tech stocks contributed to the losses.

The Hang Seng Mainland Properties Index and Hang Seng Tech (HSTECH) were down 0.68% and 0.68%, respectively. Notable movers included Baidu (9888) and Tencent (0700), falling by 1.54% and 1.19%, respectively. Alibaba (9988) was down 0.87%.

The Mainland equity markets were also lower, with the CSI 300 and the Shenzhen Composite Index down 0.39% and 0.52%, respectively.

Nikkei Index Tumbles Amid Yen Strength

The Nikkei Index tumbled 3.31% on Wednesday morning. On Tuesday, the USD/JPY slid by 0.94% and extended its losses on Wednesday, impacting buyer demand for Nikkei Index-listed stocks. A stronger Japanese Yen could adversely affect overseas profits, in Yen terms, impacting stock prices.

Nissan Corp. (7201) slid by 2.98%, with Sony Corp. (6758) falling by 2.22%. However, tech stocks suffered heavier losses. Tokyo Electron Ltd. (8035) tumbled 6.86%, with Softbank Group Corp. (9984) down 5.82%.

ASX 200 Struggles in Broad-Based Sell-off

The ASX 200 Index slid by 1.80% on Wednesday morning, with gold, mining, and tech stocks leading the declines. The S&P/ASX All Tech Index was down 2.05%.

Northern Star Resources Ltd. (NST) was down by 2.76% after gold prices fell by 0.24% on Tuesday. Mining giants BHP Group Ltd. (BHP) and Fortescue Metals Group (FMG) saw losses of 2.02% and 8.47% (ex-dividend), respectively. Iron ore spot slid by 3.07% on Tuesday, impacting demand for mining stocks.

Weaker-than-expected GDP numbers from Australia and concerns about global demand influenced market risk sentiment.

Investors should remain alert, with central bank commentary pivotal as the US Jobs Report looms. Closely monitor the news wires, real-time data, and expert commentary to manage trading strategies accordingly. Stay informed with our latest news and analysis to manage positions across the Asian equity markets.