Worse-than-expected US economic data and a sell-off in semiconductor stocks led to losses on Wall Street on Tuesday. Asia-Pacific stock markets followed the negative cues from overseas and posted some heavy losses on Wednesday.
In New York, stocks were lower after an extended Labor Day weekend. In particular, technology stocks, which are sensitive to the economy, plunged following weak sentiment data from the US manufacturing sector and a sell-off in semiconductor stocks. According to the latest survey by the Institute for Supply Management (ISM), the closely watched purchasing managers' index for the industrial sector improved from 46.8 to 47.2 points in August, but fell short of expectations of 47.5 points and remains below the growth threshold of 50 points. This important economic barometer therefore also points to a weakening of the economy as a whole. The Dow Jones Industrial fell by 1.5% to close at 40,936.93. The broad market S&P 500 fell 2.1% to 5528.93. The Nasdaq 100 fell 3.15% to 18,958.74, its biggest loss since July.
Among individual stocks, semiconductors were the biggest losers. Investors' disappointment with Nvidia's outlook last week was clearly still having an effect. Intel shares ended the day down 8.8%. Nvidia lost 9.5% and ON Semiconductor 9.1%.
Led by the Nikkei 225, Asia-Pacific markets fell sharply on the back of poor sentiment on Wall Street. Once again, semiconductor stocks were among the worst performers. Some chipmakers and Nvidia suppliers were among the losers today. In Tokyo, the Nikkei 225 lost 4.7% and the South Korean Kospi lost 3.2%. In Australia, the S&P/ASX 200 was down 2.1%, mainly due to weak oil prices. The country's gross domestic product grew by 1% year-on-year in the second quarter, in line with expectations. Compared with other markets, the Chinese and Hong Kong indices posted smaller losses. The Hang Seng Index lost 1.3% and the Shanghai Composite fell 0.7%. In China, the Caixin Services Purchasing Managers' Index for August showed slower expansion than in the previous month, falling from 52.1 to 51.6.
The Swiss economy is gaining momentum. Switzerland's gross domestic product grew by 0.5% in the second quarter, compared with a growth rate of 0.3% in the previous quarter. The Swiss consumer price index fell to 1.1% last month from 1.3% in July. However, the poor mood on Wall Street also rubbed off on the Swiss stock market. The leading SMI index ended the day down 0.8% at 12,348.19 points. The picture was similar in the eurozone, where the EuroStoxx 50 index fell by 1.2% to 4912.52 points.
Corporate news in focus: There is no important corporate news today.
Economic data in focus: Purchasing managers' surveys in the services sector in the eurozone countries, the UK and the USA. Canada interest rate decision. USA trade balance and Fed Beige Book.
Global economic and market trends at a glance
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Editor: Alessandro Fezzi
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Definition of rating categories of S&P and Moody’s which are relevant for us:
AAA/Aaa: Borrower with highest credit quality. Default risk also virtually negligible over the longer term
AA/Aa: Safe investment, default risk virtually negligible but more difficult to assess in the longer term
A: Safe investment as long as no unforeseen events impair the overall economy or sector
BBB/Baa: Average investment. However, problems must be expected if the overall economy deteriorates
BB/Ba: Speculative investment. Defaults must be expected if the economic situation deteriorates
B: Highly speculative investment. Defaults are likely if the economic situation deteriorates
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