Global Markets Traded Sideways Ahead of Friday's Nonfarm Payroll Data

Alexander Garcia
04 Sep, 2024
Miami

Stocks were in a holding pattern, and investors are on edge after economic slowdown worries resurfaced. 

U.S. stock stocks struggled to stay above the flatline as tech stocks continued to decline.

The S&P 500 index and the Nasdaq Composite traded in a tight range as investors shifted their attention to the release of nonfarm payroll data on Friday. 

Wall Street indexes posted their worst losses on Tuesday since the steep market loss on August 5 as chip stocks continue to underperform. 

The latest update on the labor market showed job openings in July declined to the lowest level since January 2021. 

The number of job openings declined 237,000 to 7.673 million from the downwardly revised 7.91 million in June, the U.S. Bureau of Labor Statistics reported Wednesday. 

Job openings declined the most in healthcare, warehousing, transportation, and state and local government. 

Nvidia dropped as much as 2% after a Bloomberg report noted that the U.S. Justice Department served subpoenas to the company amid a widening investigation of its antitrust practices. 

AMD, Qualcomm, Micron Tech, and other chipmakers were down following the decline in Nvidia. 

Meta Platforms, Microsoft, Amazon, and Apple declined between 0.5% and 1.4%. 

Investors are preparing for more volatile days ahead in September, historically a weak month for stocks, and market participants are awaiting the release of nonfarm payroll data on Friday. 

The U.S. trade deficit in July widened to $78.8 billion, and exports rose at a faster pace than imports, the Bureau of Economic Analysis reported Wednesday. 

Exports increased 0.5% to $266.6 billion, and imports advanced 2.1% to $345.4 billion, widening the deficit to $78.8 billion. 

Higher imports of computer accessories, transport services, and charges for use of intellectual property contributed to the increase in imports. 

The deficit with China increased $4.9 billion to $27.2 billion after exports declined $1.0 billion to $11.5 billion and imports rose $3.9 billion to $38.7 billion. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index decreased 0.1% to 5,520.73, the Nasdaq Composite fell 0.1% to 17,108.71, and the Russell 2000 index rose 0.2% to 2,153.40. 

The yield on 2-year Treasury notes edged lower to 3.87%, 10-year Treasury notes decreased to 3.84%, and 30-year Treasury bonds inched lower to 4.13%.

WTI crude oil decreased $0.45 to $69.72 a barrel, and natural gas prices edged up 4 cents to $2.14 a thermal unit.

Gold rose by $2.77 to $2,495.99 an ounce, and silver increased by $0.12 to $28.19.

The dollar index, which weighs the US currency against a basket of foreign currencies, edged higher to 101.62.

 

U.S. Stock Movers

Nvidia Corp. declined 1.0% to $106.91, AMD rose 2.5% to $140.48, Qualcomm added 1.2% to $165.28, and Micron Technology gained 0.5% to $89.07. 

Microsoft fell 0.6% to $407.07, Meta Platforms decreased 0.3% to $510.47, and Amazon.com Inc. declined 1% to $174.39. 

Dollar Tree plunged 19% to $66.20, and the deep discount retailer reported weaker-than-expected second quarter results and the retailer lowered its full-year outlook. 

The company guided its full-year adjusted earnings per share to range between $5.20 and $5.60 from the previous estimate between $6.50 and $7.0. 

Dick's Sporting Goods dropped 8.6% to $212.16, despite the sporting goods retailer reporting better-than-expected second quarter results and raising its full-year earnings estimate. 

The specialty retailer revised its full-year earnings per share to between $13.55 and $13.90 from the previous estimate between $13.35 and $13.75. 

 

European Markets Extended Losses by 1% Amid Growth Worries In the U.S. and China 

European markets extended losses on Wednesday as investors worried about economic growth in the U.S. and China. 

Benchmark indexes in Paris, London, and Frankfurt declined around 1% and extended losses for the second day in a row after U.S. manufacturing sector activities contracted for the fifth month in a row in August and fell in 21 out of 22 months. 

Moreover, a private survey in China showed service sector expansion moderated last month, despite the peak summer travel season. 

Meanwhile, the Euro Area's private sector economic growth accelerated in August from the previous month, according to a survey compiled by S&P Global. 

HCOB's Euro Area Composite PMI accelerated to 51.0 in August from 50.2 in July and expanded at the fastest pace in three months, driven by an upturn in service sector activities. 

The final reading for the composite index was revised slightly lower from the initial estimate of 51.2. 

The composite index's increase was driven entirely by the increase in the service sector, and the manufacturing sector contraction deepened and extended the decline to the 17th consecutive month. 

Producer prices in the Euro Area increased 0.8% from the previous month and declined 2.1% from the previous year in July, Eurostat reported Wednesday. 

The wholesale price increase in the month was driven by the surge in energy prices, while costs declined for intermediate, durable, and non-durable goods. Excluding energy, producer prices decreased 0.1%. 

 

Europe Indexes and Yields

The DAX index decreased by 0.8% to 18,590.95; the CAC-40 index fell by 1.0% to 7,500.97; and the FTSE 100 index declined by 0.4% to 8,269.60. 

The yield on 10-year German bonds edged lower to 2.22%, French bonds inched down to 2.96%, the UK gilts edged down to 3.96%, and Italian bonds decreased to 3.63%.

The euro edged down to $1.10; the British pound inched higher to $1.31; and the U.S. dollar strengthened to 85.01 Swiss cents.

Brent crude decreased $0.49 to $73.11 a barrel, and the Dutch TTF natural gas fell by €1.35 to €35.66 per MWh. 

 

Europe Stock Movers

Semiconductor companies led the decliners in Wednesday's trading, following heavy losses in the sector in New York on Tuesday. 

Market sentiment weakened after the U.S. Justice Department sent subpoenas to AI-chipmaker Nvidia as a part of its deepening probe into the company's antitrust practices. 

ASML Holding declined 5.4% to €737.10, STMicroelectronics dropped 2.5% to €26.67, and NXP Semiconductors plunged 5.4% to €211.0. 

Commerzbank AB dropped 1.8% to €12.85 after a Bloomberg report suggested that the German government is planning to sell between a 3% and 5% stake in the lender. 

Telia AB declined 0.5% to SEK 32.45, and the Swedish telecom company announced a restructuring plan. 

Direct Line Insurance Group declined 1.0% to 191.40 pence after the company reported weaker-than-expected first-half results. 

Oil explorers traded volatile for the second day in a row, and crude oil prices hovered near a nine-month low, weighed down by concerns over rising supply and a weakening demand outlook. 

BP plc decreased 0.1% to 415.95 pence, Shell PLC dropped 0.6% to 2,597.0 pence, and TotalEnergies edged up 0.1% to €60.59. 

Barratt Developments declined 2.2% to 509.0 pence, and the UK-based housebuilder said profit declined 75% in the year ending in June. 

 

Japan Indexes Plunged 4% After U.S. Tech Stocks Dived 

Japan's market indexes dropped sharply following overnight losses in New York led by tech stocks after an economic slowdown worries resurfaced. 

The Nikkei 225 plunged as much as 5.3% and the Topix index dropped nearly 4% as investors sold stocks after semiconductor equipment makers led the decliners. 

Market sentiment in Tokyo weakened following the losses in overnight trading in New York and Europe after a private survey of manufacturing activities showed weakening growth for the fifth month in a row. 

The S&P 500 index dropped more than 2%, the technology-focused Nasdaq Composite declined more than 3%, and indexes in Europe dropped as much as 1% in active trading. 

The fears of an economic slowdown gripped market sentiment again after five weeks, when a slowdown in payroll additions plunged market indexes around the world. 

However, those fears of an economic slowdown in the U.S. were set aside over the next three weeks after a string of positive data suggested that the economy continues to expand and inflation remains subdued. 

Investors shifted their attention to the release of the nonfarm payroll report on Friday, and if the U.S. economy adds less than 125,000 net new jobs in August, market indexes may face additional selling pressure. 

Closer to home, Japan's service sector growth moderated in August, according to the final estimate conducted by au Jibun Bank. 

The au Jibun Bank Japan Services PMI moderated to 53.7 from the preliminary estimate of 54.0, S&P Global said in a report released Wednesday. 

The service sector activities expanded for the seventh month in a row, and the rate of change matched the previous month's rate. 

 

Japan Stock Movers 

The Nikkei 225 Stock Average plunged 4.3% to 37,011.80, and the broader Topix index declined 3.7% to 2,632.80. 

Tech-led sell-off in Tokyo quickly spread to other sectors amid worries of strengthening the yen. 

Tokyo Electron declined 8.6% to ¥22,995.0, Advantest fell 7.7% to ¥6,129.0, Screen Holdings plunged 9% to ¥9,668.0, and SoftBank Group decreased 7.7% to ¥7,781.0. 

Renesas Electronics dropped 8.9% to ¥2,265.0 and Socionext fell 9.1% to ¥2,837.50. 

Sumitomo Mitsui Financial Group decreased 4.5% to ¥9,415.0, Mitsubishi UFJ Financial Group dropped 5.6% to ¥1,509.0, and Mizuho Financial Group eased 5.2% to ¥2,974.0. 

The yen strengthened to 145.09 after the Bank of Japan reiterated its hawkish stance and said that the central bank is prepared to lift rates if inflation data warrants such a move. 

Toyota Motor decreased 3.5% to ¥2,674.0, Honda Motor declined 4.6% to ¥1,530.0, and Nissan Motor plunged 3.8% to ¥413.50. 

 

Hang Seng Index Drops 1.3% Following Overnight Losses In New York 

Market indexes in Hong Kong and Shanghai dropped following overnight losses in New York after fears of a U.S. economic slowdown resurfaced. 

The Hang Seng index dropped 1% and the mainland China-focused CSI 300 index declined 0.4%, tracking losses on Wall Street and that rippled to markets in Europe and Asia. 

The S&P 500 index dropped more than 2% and the technology-focused Nasdaq Composite declined more than 3% after a private survey tracking manufacturing activities showed a contraction for the fifth month in a row in August. 

The fears of an economic slowdown gripped market sentiment, and only five weeks ago world markets plunged more than 5% after the U.S. labor markets signaled a possible slowdown. 

However, those fears were set aside over the next three weeks after a string of positive economic data suggested that the economy continues to expand amid weakening inflation. 

Investors shifted their attention to the release of the nonfarm payroll report on Friday, and if the U.S. economy adds less than 125,000 net new jobs in August, market indexes may face additional selling pressure. 

Closer to home, a private survey tracking service sector activity growth moderated in August. 

The Caixin General Service Purchasing Managers' Index slowed to 51.6 in August from 52.1 in July, indicating a slowdown in growth in the sector's activities. 

New order growth eased and input costs increased at the fastest pace in a year; however, the final price for services fell for the first time in seven months amid intense competition and discounts. 

The service sector expanded for the 20th consecutive month, according to the report released by S&P Global. 

 

China Stock Movers 

The Hang Seng index declined 1.1% to 17,462.25 and the CSI 300 index dropped 0.4% to 3,260.34, tracking losses in Asia and Europe as investors switched to risk-on mode. 

Oil exploration companies fell sharply in Hong Kong and Shanghai after crude oil prices plunged as much as 5% to $69.55 a barrel. 

CNOOC Ltd. decreased 5.5% to HK $20.05 and Petro China declined 5.9% to HK $6.52. 

Tech stocks traded down, following sharp losses in artificial intelligence-linked stocks in overnight trading in New York, and semiconductor stocks were among the leading decliners. 

Tencent Holdings declined 1.2% to $373.60, Meituan edged up 0.5% to HK $119.50, Alibaba Group inched higher 0.5% to HK $80.30, Baidu dropped 1% to HK $80.50, and JD.com rose 1.1% to HK $106.10. 

SMIC fell 2% to HK $16.04, Sense Time Group fell 2.6% to HK $1.11, and Wingtech Technology decreased 0.4% to 24,90 yuan. 

Hong Kong Exchanges and Clearing Limited declined 1.1% to HK $230.20 and approached its five-year low.