Global Stocks Tumble as Flight From Risk Persists: Markets Wrap

(Bloomberg) — A global flight from risk assets continued on Wednesday after fears about the US economy and a retreat from big tech triggered a sharp decline in US stocks.

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Europe’s Stoxx 600 index dropped 0.9% with technology stocks such as ASML Holding NV taking the biggest losses. Futures contracts for the S&P 500 pulled back 0.5% after the gauge suffered its worst day since the Aug. 5 market meltdown. Asian chipmakers tumbled, in step with Tuesday’s slump in Nvidia Corp., pulling a regional equity benchmark down more than 2%.

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Traders are bracing for further volatility as they await data for clues on whether the US economy is on the brink of a recession and how the Federal Reserve might approach monetary policy easing. A US job openings report due on Wednesday is expected to show further cooling in the labor market, following yesterday’s data showing a fifth consecutive month of contraction in manufacturing activity.

As the market’s focus shifts from inflation to concerns over economic growth, negative macro data is increasingly translating into pain for stocks and other risk assets. For now, traders are anticipating the Federal Reserve 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 market will be jittery into the payroll data this week and a host of other employment indicators,” Mohit Kumar, chief economist for Jefferies International, said in a note to clients. “It is prudent to have some hedges in place as we expect increased volatility over the coming weeks.”

Yields on 10-year Treasuries dropped two basis points to extend Tuesday’s declines. A dollar gauge snapped a five-day winning streak while the yen rose. Oil pushed lower after a decline of almost 5% on Tuesday amid weak demand and oversupply concerns.

Key events this week:

• Eurozone HCOB services PMI, PPI, Wednesday

• Canada rate decision, Wednesday

• US job openings, factory orders, Beige Book, Wednesday

• Eurozone retail sales, Thursday

• US initial jobless claims, ADP employment, ISM services index, Thursday

• Eurozone GDP, Friday

• US nonfarm payrolls, Friday

• Fed’s John Williams speaks, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 fell 0.9% as of 8:17 a.m. London time

• S&P 500 futures fell 0.5%

• Nasdaq 100 futures fell 0.8%

• Futures on the Dow Jones Industrial Average fell 0.3%

• The MSCI Asia Pacific Index fell 2.4%

• The MSCI Emerging Markets Index fell 1.6%

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Currencies

• The Bloomberg Dollar Spot Index fell 0.2%

• The euro rose 0.1% to $1.1057

• The Japanese yen rose 0.3% to 145.02 per dollar

• The offshore yuan rose 0.1% to 7.1136 per dollar

• The British pound was little changed at $1.3113

Cryptocurrencies

• Bitcoin fell 2.9% to $56,499.86

• Ether fell 3.1% to $2,385.25

Bonds

• The yield on 10-year Treasuries declined two basis points to 3.82%

• Germany’s 10-year yield declined three basis points to 2.25%

• Britain’s 10-year yield declined two basis points to 3.97%

Commodities

• Brent crude fell 0.8% to $73.18 a barrel

• Spot gold fell 0.3% to $2,486.61 an ounce

This story was produced with the assistance of Bloomberg Automation.

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