U.S. index futures fell in premarket trading on Wednesday, following a steep decline the day before. With September historically weak for stocks, investors anticipate volatility and potential buying opportunities.
At 5:01 AM, Dow Jones futures (DOWI:DJI) dropped 89 points, or 0.22%. S&P 500 futures lost 0.36%, and Nasdaq-100 futures fell 0.53%. The 10-year Treasury yield was at 3.821%.
Today’s U.S. economic agenda includes the release of the July trade deficit at 8:30 AM, expected at $79 billion, up from $73.1 billion previously. At 10:00 AM, the July job openings data is expected to show 8.1 million, slightly down from 8.18 million the prior month, and factory orders are forecast to grow by 4.9%, reversing June’s 3.3% drop. At 2:00 PM, the Fed Beige Book will be published. August auto sales are expected to be announced at an unconfirmed time.
In commodities, oil prices fell on Wednesday, extending a more than 4% drop from the previous day, driven by expectations of a resolution to Libya’s political dispute that cut production and exports, and concerns about weak global demand growth. Additionally, weak economic data from China and the U.S. put pressure on prices.
West Texas Intermediate crude for October fell 0.53%, to $69.97 a barrel, while Brent for November dropped 0.39%, to $73.46 a barrel.
Gold (PM:XAUUSD) fell for the fourth consecutive day amid rising stock purchases and concerns about economic growth. Gold demand may be impacted by employment data to be released on Friday, which could influence Federal Reserve policy. Spot gold dropped 0.8% to $2,473.20 after reaching a record in August.
Asia-Pacific markets saw significant losses on Wednesday. Japan’s Nikkei 225 and Topix fell 4.24% and 3.65%, respectively. South Korea’s Kospi and Kosdaq lost 3.15% and 3.76%. Taiwan’s index led losses, dropping 4.52%. Australia’s S&P/ASX 200 fell 1.88%, while China’s CSI 300 dipped 0.63%. Hong Kong’s Hang Seng was down 1.26% in the final hour of trading.
Japanese stocks suffered their largest decline since entering a bear market, driven by weak U.S. industry data, a tech sell-off, and a stronger yen. Concerns about a potential U.S. recession and rising borrowing costs in Japan also weighed on the market.
Japan’s service activity remained in expansion in August, with the PMI stable at 53.7. Despite slowing new business, exports grew at the fastest pace in three months, supporting the sector. Service price inflation slowed, and business optimism hit a 19-month low.
In China, service growth slowed in August, with the PMI falling to 51.6. While new business continues to expand, the pace has slowed, and rising costs led to job cuts. Exports grew, driven by tourism, but cost inflation and falling selling prices pressured companies.
China plans to tackle imbalances and fragmentation as it develops new infrastructure to modernize manufacturing. Despite leading in 5G networks and fiber optics, there are coordination challenges and regional disparities. The new infrastructure will support innovative economic growth and strengthen industry, focusing on advanced sectors like AI and big data. China also seeks to develop its chip industry to reduce reliance on Western technologies.
Taiwan accused Chinese companies, including Naura Technology, of poaching talent and stealing trade secrets, escalating the global rivalry in the chip sector. The investigation revealed violations of Taiwanese law, with Naura accused of illegally recruiting chip equipment engineers.
In Australia, the economy stalled in the second quarter, with real GDP growing just 0.2%, below the 0.3% expectation. Rising borrowing costs and persistent inflation pressure consumers, while government spending drives growth. High inflation and falling productivity signal that economic recovery will be slow.
In July, Australian households increased spending on essential services like healthcare, while tax cuts and high inflation and interest rates strained savings. Overall spending rose 0.8%, but the annual growth rate slowed to 2.9%. Household deposits increased by 2.1%.
European markets are down, with all sectors in the red, following losses in Wall Street and the Asia-Pacific. According to CNBC, the current sell-off is driven more by technical aspects and momentum rather than strong economic fundamentals.
Dmytro Kuleba, Ukraine’s Foreign Minister since 2020, submitted his resignation. The decision will be reviewed by the Ukrainian Parliament soon. Kuleba, notable for his international coordination against the Russian invasion, may be replaced as part of a broader government reshuffle.
The German government plans to sell 3% to 5% of its stake in Commerzbank AG (TG:CBK), capitalizing on the recent rise in shares, according to Bloomberg. Currently, Berlin holds about 16.5% of the bank, valued at approximately €2.5 billion.
Volkswagen (TG:VOW3) is set to meet with workers on Wednesday to discuss potential factory closures in Germany and the possible end of the job protection agreement in place since 1994. The workers’ council and the IG Metall union promise fierce resistance to the plans, which reflect the growing economic challenges facing the German automotive industry.
U.S. stocks fell sharply on Tuesday. The Dow Jones dropped 626.15 points (1.51%) to 40,936.93, the S&P 500 fell 119.47 points (2.12%) to 5,528.93, and the Nasdaq plummeted 577.33 points (3.26%) to 17,136.30.
Nvidia’s (NASDAQ:NVDA) shares fell 9.5% on Tuesday, resulting in a $279 billion loss in market value, due to cooling AI optimism following weak economic data. The 7.75% drop in the semiconductor index and the 9% drop in Intel (NASDAQ:INTC) also reflected concerns about the return of large AI investments.
The sell-off was driven by disappointing economic data, highlighting the continued contraction in U.S. manufacturing activity. The manufacturing PMI slightly rose to 47.2 in August, up from 46.8 in July but remaining below 50, indicating the sector is still in contraction. Semiconductor, steel, and oil sectors were particularly hit, with sharp declines in their respective indexes.
Before the market opens, quarterly reports will be released by Dick’s Sporting Goods (NYSE:DKS), Dollar Tree (NASDAQ:DLTR), Hormel Foods (NYSE:HRL), Ciena (NYSE:CIEN), Core & Main (NYSE:CNM), America’s Car-Mart (NASDAQ:CRMT), Torrid Holdings (NYSE:CURV), J.Jill (NYSE:JILL), KNOT Offshore Partners LP (NYSE:KNOP) and Daktronics (NASDAQ:DAKT).
After the close, reports are expected from C3.ai (NYSE:AI), Hewlett Packard Enterprise (NYSE:HPE), ChargePoint (NYSE:CHPT), Casey’s (NASDAQ:CASY), Credo (NASDAQ:CRDO), Sprinklr (NYSE:CXM), Copart (NASDAQ:CPRT), AeroVironment (NASDAQ:AVAV), Verint (NASDAQ:VRNT) and Concrete Pumping Holdings (NASDAQ:BBCP).