Asian Stocks Set to Slide as Slowdown Fears Grow

Published on 03 Oct 2019. | Source: theedgemarkets.com

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(Oct 3): Asian stocks looked set for declines after U.S. equities fell and Treasuries rose following disappointing American data that increased concerns about a global slowdown.

Futures pointed lower in Japan, Australia and Hong Kong, with markets in China and South Korea closed. Earlier, the S&P 500 suffered its first back-to-back drops of more than 1% this year as private payrolls fell short of estimates a day after a manufacturing gauge slumped to the lowest in a decade. The hiring numbers pushed the 10-year Treasury yield lower for a fifth straight day to 1.6%. The yen rose versus the dollar and gold spiked above $1,500.

The most recent economic numbers are driving concerns that a slowdown, which had been mostly confined to manufacturing, may be spreading to the consumer as the U.S.-China trade war drags on. Those fears increased bets that the Federal Reserve will cut rates this month. Focus now turns to services PMI data on Thursday and the nonfarm payrolls figure on Friday.

“The employment number is going to be a very important metric for the Fed,” Subadra Rajappa, head of U.S. rates strategy at Societe Generale SA, told Bloomberg TV. “It’s the most important data point heading into the October FOMC meeting. If you get a weak number you’re going to get more of a bull steepening - the market starting to price in more rate cuts.”

Elsewhere, oil fell to the lowest level in almost two months after swelling inventories in the world’s biggest economy added to a pessimistic and weakening economic backdrop.

Here are some key events coming up this week:

    The monthly jobs report is due on Friday.
    Federal Reserve Chairman Jerome Powell is set to speak Friday.
    The Reserve Bank of India sets policy on Friday.

Here are the main moves in markets:
Stocks

    The S&P 500 Index fell 1.8%.
    Futures on Japan’s Nikkei 225 fell 1.6%.
    Hang Seng futures slid 0.8%.
    Futures on Australia’s S&P/ASX 200 Index lost 1.8%.

Currencies

    The yen was at 107.17 per dollar.
    The offshore yuan traded at 7.1460 per dollar.
    The euro bought $1.0961.

Bonds

    The yield on 10-year Treasuries decreased four basis points to 1.60%.

Commodities

    West Texas Intermediate crude lost 1.8% to $52.64 a barrel.
    Gold was at $1,499.45 an ounce after rising 1.5%. - Bloomberg